If the country is on an unsustainable fiscal path, which it is, and if continued partisan bickering will not solve this problem, which it won’t, and if divided government has been re-elected, which it has, then the only choices are calamity or compromise.

The Concord Coalition urges compromise.

That must begin immediately as the two parties negotiate a responsible alternative to the “fiscal cliff” – a combination of tax increases and spending cuts that will hit with such suddenness that it could throw the still-fragile economy back into recession.

But they can’t just kick the can down the road — again. The year-end fiscal cliff is bad, but eventually we will need the longer-term deficit reduction produced by the policies comprising the fiscal cliff. It just needs to be phased-in in a more rational way as proposed by the bipartisan Simpson-Bowles and Domenici-Rivlin recommendations…

Solutions will be impossible if both parties retreat to their partisan corners and stubbornly insist that compromise is only something for the other side to do and that any calamity is only the other side’s fault.

It’s long past time to stop such unrealistic nonsense.

There must be spending cuts, including reform of our major entitlement programs such as Medicare, Medicaid and Social Security. And there must be tax reform that broadens the base, maintains progressivity and increases revenues. And all of this must be, and indeed can be, done in a way that enhances economic growth.

Neither side has a monopoly on wisdom for how this should be accomplished, and neither side has a mandate, or the votes, to ram through its own purist agenda…

110 Responses to “Onward”

For several years I’ve been saying that Republicans need to make a deal with Democrats to increase tax revenue in exchange for spending decreases (measured in percentage of GDP).

Republicans are still smarting from the way the Democrats sucker-punched George Bush the Elder when agreed to raise taxes and Democrats didn’t come through with spending cuts. So here is the solution:

Phase increases in tax rates based on the level of spending in the prior fiscal year. Stipulate for the moment that tax revenues are 16% of GDP and spending is 23% of GDP. If say June 30, 2014, the trailing 12 months of federal expenditures are 22% of GDP, then tax rates for 2015 would be increased to raise 17% of GDP.

Do the same on June 30, 2015. If expenditures are at 21%, then tax revenues increase to 18%.

For my example, make 19.5% of GDP the balanced budget target. So the key thing in negotiations is to set the balanced budget target percentage of GDP. Once you’ve defined a budget constraint, then you impose the motivations for real compromise to occur. You only get compromises when both parties are forced to act.

Democrats might not like this deal, but the Republicans have an Ace in the Hole - The Debt Limit. They can force spending cuts by simply refusing to raise the debt limit. However, they won’t get public support for this action UNLESS they show the public that they are serious about compromising and raising taxes.

If Republicans demonstrate that they are willing to sacrifice their sacred cow, then the Democrats will have no choice but to offer cuts to Medicare, Medicaid, and Social Security.

Both parties will alienate their favored constituencies to arrive at a budget deal. Only the ideologues and the pigs at the public trough will get in the way.

Addendum:
If spending were to increase from 23% to 24%, then tax rates would be reduced from 16% to 15%.

In other words, the penalty for profligate spending will be profligate tax cutting. Increase the debt to crowd out future profligate spending.

Also, the agreement could provide that if spending is cut below 19.5% of GDP to say 18% of GDP, then tax rates would be increased to raise 21% of GDP in revenue. Then ensure that the surplus would have to be paid out as reduction in principal owed on the debt.

‘There must be spending cuts, including reform of our major entitlement programs such as Medicare, Medicaid and Social Security. And there must be tax reform that broadens the base, maintains progressivity and increases revenues. ‘

Problem was that Romney was stuck with the Ryan Budget that did not contemplate any tax increases. The Ryan Budget is not a realistic plan. Republicans have to come to the table with willingness to increase tax revenues.

Problem is that Democrats don’t come to the table with any ideas for spending cuts other than for the defense department. In fact, they think that 23% of GDP in federal spending won’t be enough. Krugman thinks it should be 28%.

Republicans can expose the non-seriousness of the Democrats on spending cuts and entitlement reforms by coming forward with a compromise: spending cuts first, tax revenues later.

Obama can get just about tax deal he wants in exchange for repeal of ObamaCare. ObamaCare irresponsibly expended much of our available tax increase ammunition to increase the scope of government rather than to cut the deficit.

Only a truly humble man would offer to sacrifice his signature achievement. But I can dream. It would be a huge step toward closing the long-term fiscal gap.

Per the Budget Control Act of 2011, apparently Congress must either “reduce” deficits by a particular amount, or if they fall short of that amount, the balance will be made up by automatic
“cuts” in spending per sequestration.

My understanding is that the BCA sets a cap on discretionary spending for the FY’s 2012 through 2021. The caps are expected through the sequestration mechanism to reduce the deficits by $1.2 trillion over that time frame (approx. 50 percent to defense spending and 50 percent to discretionary non-defense spending). They would begin to kick in on Jan 1, 2013 (the same date the tax cuts are scheduled to expire—a double whammy, if you will).

The estimated reduction in spending and in the deficit is based on the CBO baseline of March 2011. That is, law as was current at that time including CBO assumptions as to growth as based on that current law. The law sets fixed limits on discretionary spending as measured against that baseline.

Thanks. So your understanding is that the $1.2 billion is vs. the current law baseline of March 2011, through 2021. Am I correct in assuming that the discretionary spending that was in that baseline (prior to the caps imposed by this law) were based on CBO assumptions re: growth or decline in various discretionary spending categories, or were there already prior caps in total discretionary spending in that March 2011 current law baseline?

I’m just wondering if the “cuts” are per CBO assumptions (political, economic, whatever) re: changes in discretionary spending.

Very smart move by Obama and the Ds (in the Senate). Apparently the Senate has already passed a bill to extend the Bush/Obama tax cuts for all but high earners. Obama is just said (as he has before, but hasn’t emphasized), in effect (this isn’t a quote),”We all agree we don’t want taxes to go up on the middle class, so let’s extend current tax rates for them now, and deal with tax rates for the rich later”. If the Rs reject that only because “the rich” aren’t included, that is really bad P.R. for the Rs. Of course, the Rs in the House probably will (and may have already) passed legislation extending tax cuts for everyone, but Ds rejecting that because it fails to ask “the rich” to help reduce deficits (arguing that that requires the middle class to sacrifice that much more) isn’t as bad P.R. as the Rs, in effect, voting to increase taxes on the middle class unless “the rich” can keep their current tax rates too.

It seems likely that tax deductions, etc., are likely to be key here, whether or not they satisfy Ds enough to completely avoid ANY tax rate increase on high earners. But I think this move by Obama and the Ds, which Obama made the case for very well just now, clearly and simply, puts pressure on Rs to probably give more to Ds than they would otherwise.

The Rs are making the (predictable) argument that raising taxes on top earners will mean fewer jobs. They are apparently using misleading figures (http://www.washingtonpost.com/blogs/fact-checker/post/would-a-tax-hike-on-the-wealthy-kill-700000-jobs/2012/11/08/ae69d1ea-29f0-11e2-96b6-8e6a7524553f_blog.html), but aside from the matter of magnitude (which Obama and the Ds should address), a good response from Obama and the Ds would be something along the lines of:

Well, the additional tax revenue we want to get from the wealthy is to reduce the deficit, and the Republicans say they agree we need to reduce the deficit, because if we don’t, it will cost us the most jobs in the long run, and if we don’t ask the wealthy to contribute more, that means all other Americans — everyone who isn’t wealthy — will have to sacrifice that much more. I mean, that’s just math. So the question is: Do we ask the wealthy to contribute more, or do we ask the other 98% of Americans to sacrifice that much more so that the wealthy don’t have to contribute that additional amount. And if we ask the 98% of Americans who aren’t wealthy to sacrifice more, that will hurt the people who will feel it a lot more, AND we’ll have more jobs if we ask the wealthy to pay more than if we take that out of the middle class and those struggling to make it into the middle class, because those Americans spend more of their income, helping our economy at this time when we need to continue the recovery, but the wealthy will save more of their income instead. Economists generally agree on this.

Of course, one could argue that shifting to savings is better for the long term, but if Rs are making the argument re: short-term jobs, the Ds have that easy, and I think effective, response to offer.

As follow up to my reply to you above, I was sloppy in my wording of “I’m just wondering if the “cuts” are per CBO assumptions (political, economic, whatever) re: changes in discretionary spending.”

What I meant, as per the rest of my comment, was that I’m wondering if the baseline from which the $1.2 trillion was calculated (and of course I meant to say “trillion” earlier, not “billion”) was based on CBO assumptions re: changes in discretionary spending over that period.

The CBO baseline would have included assumptions as to inflation and the impact of the then current law. They would not have assumed changes to current law. I have not gotten into the weeds as to whether any assumptions regarding the “Doc Fix” etc would have an effect. If you want that info, suggest you hire a research assistant.

If you just don’t know, that’s fine to say. Not asking you to play the role of my “research assistant”, just asking if you happen to know something or have quick access to the answer (an answer I couldn’t find after searching a bit myself). That’s something people do on blogs — do little favors for each other to share knowledge, info, etc. No reason for snark.

“Ask” was part of what I was saying would be good political rhetoric for Obama and the Ds. It’s not a term I would use in advocating for a tax increase, for the exact reason you give.

That said, do I think it crosses the line into unethical dishonesty? No, because everybody knows the nature of taxes. And everybody knows that sometimes “ask” isn’t really asking, as in when some authority at some venue says to someone whose presence/behavior is deemed unacceptable, “I’m gonna have to ask you to leave”.

So if I were advising Obama and the Ds on talking points, I wouldn’t have an ethical problem advising the use of “ask” there.

The CBO baseline assumes current spending and projected growth based on inflation. The Doc Fix is relevant because the bill calls for Medicare to be cut, but not more than 2 percent per year. The sequestration is *not* limited to discretionary spending, although the limits on non-discretionary spending are spelled out and exclude, e.g., Social Security.

As far as favors are concerned, no problem. However, you seem to have a record of asking these innocent questions and then attacking the hand the feeds you, as in your last comment.

Regarding the “ask” and “contribute” issue, I’m not interested in rhetoric.

It does seem appropriate, though, to consider the entire issue of how much taxes should increase, and on whom, together with how much spending should be decreased and whose spending should be cut in one package.

If one is interested solely in gaining tactical advantage, then Brooks likely has a point. If one is interested in solving the fiscal mess, these “tactics” do not help at all.

Thanks re: CBO. I still think you are incorrect in saying that CBO merely applies inflation to project discretionary spending. I think, for example, they factor in the downward effect on Defense spending if the assumption is that we’ll withdraw from a war. And probably population growth is a factor. Etc.

Re: you seem to have a record of asking these innocent questions and then attacking the hand the feeds you, as in your last comment.

Don’t be silly Vivian. In my last comment I was just pointing out that your snark (re: “research assistant”) was unjustified. And no, I don’t have such a record. Sometimes I ask people questions, usually related to some view they’ve expressed, to try to find out if their apparent premises (or those I think are probably needed to support their view) are valid or not. It seems you’re still carrying an unwarranted grudge from a prior thread (or more). I suggest you let it go.

Re: “Ask them to contribute”, first of all, as I said to AMT, it’s not really unethically dishonest because everyone knows the government isn’t “asking” you to choose if you want to pay your tax liability or not. People know that “ask them to contribute” in this case means “force them to hand over (and convict them if they don’t, perhaps even sending them to prison),” but “ask” makes that sound slightly less harsh, even though no one is confused about what it means. I do want to make something clear, though: I don’t know whether or not your last paragraph was implying I am “interested solely in gaining tactical advantage” rather than in “solving the fiscal mess”, but to be clear, my concern is the latter.

Nevertheless, I have an “interest” (meaning, I find it interesting) in political strategy, too, not least in “positioning” and messaging. I happen to be a marketing strategy consultant in real life, and that’s because I find such stuff interesting. Although my clients are private sector and mostly (but not exclusively) for-profit and unrelated to politics, I have, albeit to a much lesser extent, worked in the latter, and moreover many of the fundamentals apply regardless of what widget or service or idea is being marketed. I don’t think it’s inappropriate for me to occasionally address such matters here. If you have no interest in such stuff, no problem.

The Senate cannot originate revenue bills. Constitutionally, they must begin in the House. It’s also the case that the bill you reference was passed in July.

As to “ask them to contribute,” of course it’s unethical. The fact that it should be common knowledge that you are ordering rather than asking doesn’t make it any less a prevarication.

If your concern is, as you say, “solving the fiscal mess,” perhaps you might realize that a strategy that relies on using language to gain small advantage is insufficient to the challenge. Honesty on all sides will be necessary, a point that makes me despair for the future of our country.

Finally, as someone who might be concerned with solving the problem, the entire framework established by the President and his allies on this is egregious. Indeed, the latest notion is that we will somehow keep the “payroll tax holiday” (another euphemism) for another year. Of course, the “payroll tax holiday” costs the Treasury more money than the “tax cuts on millionaires and billionaires.” But, I suppose such honesty is the price of “solving the fiscal mess.”

” People know that “ask them to contribute” in this case means “force them to hand over (and convict them if they don’t, perhaps even sending them to prison),” but “ask” makes that sound slightly less harsh, even though no one is confused about what it means. ”

Brooks,

If the use of those rhetorical terms are justified because people know what one really means, what is the sense, much less justification, of using that rhetoric in the first place?

Obama has the expiration of Bush tax rates as a bargaining advantage. Republicans have the debt limit vote as their advantage.

Republicans should hold Obama and the Democrats hostage with the debt limit vote. Enough tax revenue comes in to fund the most important programs (defense, justice, SS, Medicare, etc.) and pay interest on the debt.

Obama will be forced to suspend all the programs in Agriculture, Commerce, Education, Labor, HUD, HHS that need debt financing. What’s not to like about that situation for Republicans? That might be a nice permanent solution.

However, the public would only support this action if the Republicans offer a compromise that cuts spending and raises tax revenue. If they offer to raise the debt limit only if Obama gets serious about cutting the deficit, then they will win.

Obama and the Democrats are cynical, class warfare demagogues, and it’s time to cram the debt limit down his throat. Time to show the parasites in our electorate that the party is over when the money runs out.

Are you saying you think Obama was trying to trick people into thinking he merely wants the government to literally just “ask” the taxpayers in question to pay more, giving them the option to decline the request if they prefer not to oblige?

Do you think people will be left with that impression, whether or not that was Obama’s intent? Do you think people will be any less clear about what he means than if he had said “make” them pay more?

If the answer to all those questions is “no”, as it should be, then your protestations are much ado about nothing, and labeling such use of the word “ask” as “unethical” is to confuse, or at best, dilute the term “unethical” to the point of meaninglessness — and “unethical” is an important term to keep meaningful.

And to answer Vivian’s question re: why use “ask” for rhetorical purposes if it is universally understood to mean the same as “make” or “force” or “demand by force of criminal law with threat of imprisonment” or whatever, I think the answer is fairly obvious. We often have options among words to use, all of which will be understood to mean the same thing, but some of which bring a “vibe” more conducive to one’s objective of persuasion (as in this case) or
sensitivity or whatever. Per my earlier example, if some authority says to someone who, say, is behaving unacceptably at some venue, “I’m
going to have to ask you to leave”, he isn’t really asking, nor, by the way, is he saying only that at some future point in time he’s “going to” have to ask him to leave, nor is he merely describing an obligation he’ll have at that time (”have to”) rather than actually asking, either of which would also be obviously sillily hyper-literal interpretations, but no more silly than thinking Obama was referring
merely to a request. The meaning is obvious to all.

As a note, I have some pet peeves re: political language, too. For example, it often irks me to hear “government-funded” (or “-subsidized”, etc.) when I wish the speaker were forced to say “taxpayer-funded”. It’s not that I think people will be tricked into thinking the government has a money tree, but I would prefer the emphasis be on reminding people that some wonderful thing that “government” did to help people was funded via the confiscation of property from some people (i.e., taxation), albeit confiscation per what our democratic process has decided and thus presumably (albeit very imperfectly) per the desire of “the people” in a collective sense.

In fact, there were enough political rhetorical terms, euphemisms, etc., that, in 2007, I created my own glossary (guide) of sorts. http://swordscrossed.org/node/1721 (I hit politicians [and others] of both parties — those used by Democrats just happen to be the group at the top of my chart.)

…An couple of notes to anyone who checks out my 2007 “glossary/guide” at that link:

1. Please check the column headings so you understand what’s going on as you read across each row (for each term).

2. I hope no one just reads my calling out of one side or the other, because that could leave the wrong impression of the nature of that post. It’s not a partisan or one-sided thing. It’s calling out both sides on their B.S. And a reader of just the “Democrats” section or just the “Republicans” section could get the wrong idea about some of my views. For example, what I say in the D section re: “pro-choice” might give the false impression that I’m against abortion rights; I also have “pro-life” in the R section, and my point in both cases is that the overlooked, yet important question is “Is what’s being killed a person (for purposes of determining if there is any legal right to life), based on some sensible, secular view of what personhood means?” (That’s why I’d say it’s absurd to prohibit a very early abortion but would also be absurd to allow — just hypothetically — abortion a few days before a woman is due [unless at least the mother's health were severely threatened], given that the fetus at that point is essentially the same as a newborn, and no one would say a newborn lacks a legal right to life.) I am NOT intending to get into such issues here; just felt the need to try to avoid any misperceptions after I posted that link.

I’m accustomed to misleading hyperpartisanship from him, but this column reads like a parody of his hyperpertisanship, including his ironic charge that groups that are (in reality) urging reductions of projected deficits in the medium/long-term (but in reality not necessarily immediately, at least not on a huge scale) are “hypocritical”. As Jim Glass brought to our attention a few years ago http://www.scrivener.net/2009/08/krugman-versus-krugman-on-deficits-and.html, and which I subsequently added to at [1] (with extended “debate” [of a sort], initiated by Arne, following that thread at [2], Krugman is the king of hypocrisy on this issue, having sounded the alarm re: inevitable doom that would result from our long-term fiscal imbalance when advocating against a policy he opposed being sought by a president and party he opposed (the Bush tax cuts), and then doing a 180 when advocating deficit-increasing policies he favored by a president and party he favored (Obama stimulus), pouring ridicule on anyone expressing concern over our long-term fiscal imbalance (while also introducing and repeating his total straw man characterization of such groups and individuals — see below).

Krugman writes:

Deficit scolds are having a hard time with this issue. How can they warn us not to go over the fiscal cliff without seeming to contradict their own rhetoric about the evils of deficits?

This wouldn’t be hard if they had been making a more honest case on the budget: the truth is that deficits are actually a good thing when the economy is deeply depressed, so deficit reduction should wait until the economy is stronger…But since the deficit scolds have in fact been demanding that we make deficits the priority even when the economy is depressed, they can’t go there.

A few years ago Krugman erected this complete straw man that groups and individuals advocating fiscal responsibility were fighting for deficit-reduction even amid recession or otherwise very weak economy. Krugman persisted with this straw man even as those groups and individuals stated explicitly (in some cases as direct responses to Krugman’s charge) that they were NOT advocating immediate deficit-reduction, given the weak/vulnerable economy, but rather were focused on deficit-reduction once the economy had recovered sufficiently.

In addition to doubling down — actually much more than doubling or tripling, etc. — on his hypocrisy and on his straw man, Krugman adds what I have to assume is an utterly misleading and disingenuous characterization of proposals from CRFB and Bowles-Simpson, writing:

…the [Simpson-Bowles] report…was supposed to be focused on deficit reduction — yet, true to form, it called for lower rather than higher tax rates, and as a “guiding principle” no less.

Now, it’s possible (I don’t know) that revenues per one or both of these plans would be lower than CBO’s Current Law Baseline, but even if that’s the case, it is, to say the least, remiss of Krugman not to clarify such a point, given that, to most people, “lowering tax rates” means lowering them vs. what they are today (current policy), not vs. higher rates that are scheduled per current law.

Simpson Bowles (and I assume CRFB’s plan too) provided for higher net revenues vs. CBO’s current policy baseline [3] and even vs. the commission’s baseline that assumed expiration of upper-income tax cuts [4], generated by reductions in tax deductions (etc.) despite either lower tax rates or no increase in tax rates. This omission by Krugman is thus grossly misleading, and, given that Krugman is certainly no ignoramus, I assume he is being deliberately misleading.

Again, crap of this sort is not new from Krugman, but he actually managed to get a “wow” out of me this time, even given my expectations. Krugman typifies one of the worst elements of political discourse today: experts who abuse the trust placed (by many) in them on the basis of their expertise to mislead people regarding the trade-offs associated with policy alternatives, rather than making a good-faith effort to objectively lay out those trade-offs (with or without adding their own value judgments and policy preferences) and let their readers/viewers/listeners apply their own values and priorities to decide which trade-offs, and thus which policies, they prefer.

Krugman typifies one of the worst elements of political discourse today: experts who abuse the trust placed (by many) in them on the basis of their expertise to mislead people
You don’t know the power of the dark side…

WALLACE: Senator Conrad, you are a lame duck in the lame duck session, and as your final act before you leave office, is there the basis for a deal here? Realistically?

CONRAD: I absolutely believe there is. Look, you can’t settle every detail in these next few weeks. What you can do is agree on a framework agreement that sets out for the committees of jurisdiction how much they need to save, how much money needs to be raised. What we can also do, is have a significant down payment, so the markets understand we’re serious about this, what we can also do is have it back-stopped so if the committees of jurisdiction did not perform, there would be a real consequence.

WALLACE: That was the fiscal cliff, that’s what was supposed to happen here.

CONRAD: The difference is, the fiscal cliff was designed not to happen. That is, the sequester across the board cuts, $1.2 trillion defense, non-defense, was designed to be so onerous nobody would accept it. What we need to have as a backup is something that would actually be good policy if the operating committees didn’t act.

As I said at http://economistmom.com/2012/10/dont-ignore-the-cliff-make-it-a-better-one/#comment-93442, the concept here seems to be that such a mechanism allows our courageous, sincere politicians to, in effect, make a deal while maintaining the claim that they didn’t vote for any given unpopular measure in the deal (”I never voted to cut Program X” and/or “I never voted for that tax rate increase” or “that reduction in that tax credit/deduction”.) After all, all they did was vote for some mechanism to try to force a really good deal, but because the bad guys on the other side wouldn’t go along with doing the right thing, those unpopular measures took effect automatically.

I’ll ask again what I asked on that other thread (I don’t think anyone responded). Am I missing something, or is that what this approach is all about?

Brooks, not only do I agree that your analysis of the political cover game is correct, but I believe that the Democrats ALREADY took this approach in the mid-2011 sequester deal.

A few of them have even stated that they wouldn’t mind letting the sequester happen. What killed their strategy was that the economy did not recover in the year and a half following the debt ceiling deal.

I guess that would be one way to avoid taking responsibility for hard decisions. Here are a few other possible tactics when unpopular fiscal decisions need to be made:

1. Blame the other side (”the devil made me do it”);

2. HIde the effects. One of the reasons lowering rates and eliminating tax expenditures is now popular among both parties is that the latter can deliver more revenue than the former without the public actually being aware. This is particularly true when a tax expenditure is not eliminated, but simply subject to a cap. It does have the benefit of being economically sound;

3. Introduce changes that are not adjusted for inflation and let the latter do the work. I expect this will be one of the techniques employed, as was the case under the ACA tax increase on “the rich”. This can be particularly effective if monetary policy accommodates it.

4. As a variation of 3, change the COLA rules for social security, etc. This can deliver big savings and most people won’t be aware of it.

The downside of what Conrad is suggesting is that I don’t see how major tax *reform* which is desperately needed, could be done in the fashion Conrad suggests. That “significant downpayment” in the slight chance it would ever materialize would likely also be the final one (until the next crisis). For that reason, Option I is the best option, where there is a Grand Bargain and each side can blame the other, even though that would not preclude using it in combination with other sneaky means.

AMT — why do you think implementing the sequester would be much more acceptable to the Ds than to the Rs?

Vivian — interesting points. Re: #4, I think it’s more likely they’d change the basis for indexing each SS recipient’s initial benefit amount — changing the basis from wage inflation to price inflation — rather than changing the annual COLA. (Perhaps you meant the former, but I think usually “COLA” refers to the annual adjustment.) Changing the annual COLA means seniors will hear initially (and be reminded each year) by the media, the ARP, etc., that they are now losing purchasing power every year thanks to members of Congress and the president who enacted that change.

The non-defense spending cuts in the sequester don’t directly affect Medicare recipients. Medicare reimbursement cuts are also virtually guaranteed a reversal vote when the annual Doc Fix comes up. I doubt that any Democrat would feel that Medicare funding is at risk of losing such a vote. By comparison, restoration of defense funding would face serious opposition.

Rubin’s pitch is to let tax rates rise on high incomes, then add a 50/50 package of spending cuts and tax increases. The result relative to current policy would be mostly revenue increases, not spending cuts.

The bigger problem is that progressives don’t yet accept the necessity of flattening spending as a percentage of GDP. They think that non-structural spending cuts can and should be paired with tax increases, and that this can be done again and again as the percentage of GDP spent continues to rise inexorably.

In reality we cannot afford to spend any of our limited supply of revenue increases until we enact structural reforms which make entitlement programs sustainable. We need to patch all the holes in this sinking ship before we start pumping the water out. The first hole to patch is the one most recently drilled: ObamaCare. Next are Medicare and Medicaid. Social Security will be easy by comparison. Then it will be time to man the revenue pumps with confidence that we won’t sink after all.

My point re: Rubin was limited to my general point that a risk with a plan to raise revenue via reductions in deductions, etc., is that, given that the actual choices would (I think) be left for Congressional committees to work out, much of it might not end up happening. A tax rate increase, on the other hand, can (I assume) be enacted up front, and I assume the same for a cap on total deductions (etc.) that could be claimed by a given tax unit.

As for “unsustainable”, money is fungible, so singling out paricular programs as unsustainable while excluding other programs doesn’t make sense, although arguments could be made for starting with some programs rather than others. And as for starting with the spending side, your argument is unclear to me (or absent). If our trajectory is unsustainable it’s because of a mismatch between revenues and spending, and if projected spending alone is (literally) unsustainable it’s because spending would exceed maximimum collectible revenue. In either case, what is your argument (aside from personal preference) for starting with spending alone?

…and AMT, if your argument is that, because we have “a limited supply of revenue increases,” it’s unclear to me why that means it’s important not to use up too much of that supply too soon. Please spell it out for me.

Rubin’s argument is flawed in a way that belies his objectivity. The Presidential candidate of the party that controls the House has proposed limiting deductions. This, like raising tax rates on the “rich” was never a “plan” but a negotiating position. That’s the reality in two-party government, particularly one where the legislative control is divided.

So, let’s take a hypothetical wherein the Democrats get their *entire* goal of raising additional revenue only from those earning only $250K per year. My recollection is that this plan to raise taxes on the “rich” would raise about $82 billion per year.

Since we are talking about additional revenue, there would be two ways to achieve that result:

1. Raise marginal tax rates (as proposed); or

2. Eliminate or reduce tax expenditures for that group such to raise the same amount of revenue.

Which alternative would be *economically* superior? The vast majority of economists would say #2 (see recent series by PBS, which Jim Glass linked to earlier). Would those affected prefer #1 or #2 (as a political matter)? Common sense tells me that all of those with income over $250 would oppose raising tax rates, but only some (a minority with disproportionate deductions) would prefer raising marginal rates. And, as a party political matter, it would be much easier to eliminate deductions because this ostensibly gives the R’s a reason to support it without breaking a pledge to not raise tax *rates*.

Here’s Greg Mankiw, a lead R economic advisor, in a recent blog post:

“According to the Tax Policy Center, if we cap itemized deductions at $50,000 and keep tax rates as they are today, we would raise $749 billion in tax revenue over ten years. Moreover, according to the TPC’s distribution table, 96.2 percent of the extra revenue would come from the top quintile, with 79.9 percent from the top one percent.”

Statistically, very, very few people are taking deductions of greater than $50,000 per year—we are probably talking about a couple hundred thousand households.

So, why is this “politically infeasible” even though this was basically the recommendation of the neutral Bowles-Simpson Commission? Basically, because people like Rubin are shilling against it. This idea, or a variation of it, would be very feasible if our President were to finally get behind the very sensible recommendations of the Commission he appointed. He’s got nothing to lose and maybe, just maybe, we’ll now learn what he really believes. Like Conrad, he won’t be up for re-election. As they used to say on that popular game show “To Tell the Truth”: “Will the real Obama please stand up?” We are about to (finally) find out what his plan really is.

Of course, if we limit raising revenue to a select few, as Obama has proposed, that would necessitate massive spending cuts in order to realistically fix our long-term budget problems. My simple point is that given the amount of revenue Obama proposes to raise through tax increases and from whom, there is a much better and feasible way to do that than raising marginal rates.

“Re: #4, I think it’s more likely they’d change the basis for indexing each SS recipient’s initial benefit amount — changing the basis from wage inflation to price inflation — rather than changing the annual COLA. (Perhaps you meant the former, but I think usually “COLA” refers to the annual adjustment.) Changing the annual COLA means seniors will hear initially (and be reminded each year) by the media, the ARP, etc., that they are now losing purchasing power every year thanks to members of Congress and the president who enacted that change.”

Brooks,

Yes, COLA means the annual adjustments to benefits due to inflation (or deflation). The measure used applies not only to Social Security but a vast variety of benefits, including federal and military pensions.

Currently, social security benefits are based on CPI-W. While the “W” refers to “wages”, this measure does not reflect “wage inflation” as your comment indicated. Rather, it reflects *price inflation* on the stuff that wage earners typically buy.

Many experts have argued that this measure should be changed—perhaps to a “Chained Weighted CPI” or a Chained Weighted CPI geared directly to stuff elderly buy. It has been estimated that a chained CPI would reduce annual inflation on average by 0.3 percent and that even a move to a chained CPI for elderly (given their higher medical costs) would reduce inflation by 0.1 percent. If one were to succeed in lowering the cost curve on medical care, the savings would of course be greater.

What an elderly person would see is that the annual increases in benefits still occur, albeit at a slower rate. I think this is the most important psychological point. That is not to say that the AARP would not object to it.

These amounts may seem small, however, the effect is cumulative and in dollar terms can be significant. Some have even argued that the change to the CPI method does not even need legislation.

The short answer is we have to pick 2 of the 5. In my view, 3 is sacrosanct and not to be done on ethical grounds. I’d start with 1 and 2. Once that was stabilized, we could have a debate between 4 and 5″. Which is why I would start with spending cuts. There’s no point raising taxes if you aren’t willing to address 1 through 4

Re: Currently, social security benefits are based on CPI-W. While the “W” refers to “wages”, this measure does not reflect “wage inflation” as your comment indicated.

No, my comment didn’t indicate that. I was referring to the indexing of initial benefits. Seehttp://www.ssa.gov/policy/docs/policybriefs/pb2010-03.htmlThis policy brief analyzes the distributional effects of slowing the growth of initial Social Security benefits by using price growth instead of wage growth for future retirees. Under current law, initial benefits paid to new beneficiaries increase with wage growth from year to year. The brief compares five options set forth by the Social Security Advisory Board1 to index initial benefits to price growth

OK, then we are talking about two different things. My initial comment was about post-retirement benefits and the COLA used to increase them from year to year and not initial benefits.

Of course, one could do one or the other, or both. Changing the initial benefit formula would require legislative change; changing the post-retirement COLA measure may not.

Equitably, if you look at the return of current versus future retirees, the former get a much better return on investment. Therefore, I could make a good generational equity argument that those already retired or nearly retired should be part of the solution.

Since I’m unfamiliar with the respective potential (and politically plausible/likely) savings from each, I shouldn’t have put it as either/or (”rather than”). I should have said that I think it’s likely that they’d tap savings from changing the indexing of initial benefits first (and if that were insufficient, perhaps also change COLA). Again, my reason is that it seems to me changing the initial benefit calculation would be less transparent and wouldn’t be something beneficiaries are reminded of every year (as press and opposing politicians point out to seniors that “your cost of living adjustment for your benefits no longer preserves your purchasing power — so what you can buy with your Social Security checks will go down next year and every year — because my opponent voted to prevent your benefits from keeping up with the actual inflation rate.” Of course, someone can make a similar argument re: lower benefits due to a change in indexing initial benefits from wage inflation to (or toward, if somewhere between) price inflation, but that’s tougher to explain and probably tougher to argue convincingly (to many people) as unjustified, and it’s a one-time change and a change that affects each person just once (which they probably won’t even know about), whereas a change in COLA relates to an annual event in the news — the announcement of the COLA.

AMT, if your argument is that, because we have “a limited supply of revenue increases,” it’s unclear to me why that means it’s important not to use up too much of that supply too soon. Please spell it out for me.

Sure thing.

1. Each tax harms the economy. Government tends to start with the least harmful taxes and work its way upward until sufficient revenue is obtained. Spending a higher percentage of GDP requires more harmful taxation. At some point the revenue will peak (the Laffer Peak). There is a limit on revenue, and you want to stay well clear of it if you care about the economy.

2. Government tends to spend all available revenue and more. Therefore adding revenue makes future spending cuts harder, not easier, to achieve. At the same time, adding revenue makes it harder and more damaging to the economy to add more revenue in the future.

3. Given that large spending cuts (relative to unaffordable promised spending) are required, we need to nail down those cuts in the form of means testing, eligibility changes, and other durable changes in the promises, before adding revenue. Adding revenue before implementing all the necessary spending cuts will result in more damage to the economy and higher final spending levels. This last effect is a desired outcome for progressives, so they favor the approach of a enacting series of temporary “balanced” patches. The result of that approach will be higher spending than if we enacted one permanent “balanced” change.

Obama continued playing his hand well today, challenging the Rs to do what everyone wants — to extend tax rates for the middle class (”98% of Americans and 97% of small businesses”) — rather than to continue “holding the middle class hostage” (I may be slightly paraphrasing) to prevent the wealthy from having to pay more to reduce deficits.

And he’s using language I’ve said would be smart (at times for budget negotiations such as these, and at times vs. Romney) by making the point that, in the words I suggested a month ago would be effective rhetoric vs. Romney, “We can ask the rich to go back to contributing more to help reduce deficits, or if we don’t…the middle class will have to sacrifice that much more to reduce deficits.” http://economistmom.com/2012/10/is-romney-speeding-or-just-heading-somewhere-else/#comment-91618

Obama said today:

What I’m concerned about is not finding ourselves in a situation where the wealthy aren’t paying more or aren’t paying as much they should; middle-class families, one way or another, are making up the difference.

It’s key for Obama to make that point. A lot more people will support tax rates going up on the top 2% if they see the alternative as the 98% otherwise having to sacrifice that much more to make up the difference (given the need for deficit-reduction) vs. if they see a tax rate increase on the top 2% in isolation and as more of an abstraction, or even as something with some cost to them (fewer jobs generated by “job creators”) with no benefit (no avoidance of greater costs to them).

“…and it’s a one-time change and a change that affects each person just once (which they probably won’t even know about), whereas a change in COLA relates to an annual event in the news — the announcement of the COLA.

Not to put too fine a point on it, but a change in initial benefits “affects” not only the first check but each and every subsequent check, just like a change in COLA would. Also, while the announcement of a COLA increase (or not) would be annually, I seriously doubt the average Joe or Jane would think “Gee, I got an increase; but, having done the math, if only they’d stuck with the old CPI-W, my check would have been $5 more”.

I misspoke. Yes, obviously a lower initial benefit amount impacts all subsequent checks. What I meant to say is that, although such a change probably won’t be evident at all to beneficiaries in general, to the extent it is evident to a relatively few, and if they begrudge that change, it would be more like something they begrudge initially but with that resentment fading over time even though the impact remains, whereas COLA is in the news every year. Also, I’m guessing that more beneficiaries will see a reduction vs. a more conventional measure of inflation (for COLA) as unfair than would see a change from a wage inflation basis to price inflation (for initial benefits).

Re: while the announcement of a COLA increase (or not) would be annually, I seriously doubt the average Joe or Jane would think “Gee, I got an increase; but, having done the math, if only they’d stuck with the old CPI-W, my check would have been $5 more”.

I think you are underestimating how likely politicians would be to exploit the issue. Joe and Jane wouldn’t have to do the math. Bob the politician will do it for them, and he’ll say that “You are getting a lot less than you were supposed to get because my opponent voted to stop your benefits from keeping up with inflation. We always gave a cost of living adjustment each year based on the real measure of inflation, the one that everyone recognizes as what the inflation rate is, how much prices are going up in America, and how many more dollars Americans need to have the same purchasing power, to get the same stuff. My opponent and others decided to concoct some new formula that is lower than the inflation rate, yet they are still calling it a cost of living adjustment. Well, it’s better than nothing, but it’s not what it was and what it should be, which is an adjustment that lets your benefits keep pace with inflation.”

That politician might even add up how much difference the COLA change makes in the benefits of someone subject to the change after 5 or 10 years. Of course, the same could be done with initial benefits, but for reasons I’ve given, overall, COLA is much more frequently top of mind and exploitable.

That WSJ editorial seems to be sleight of hand, deliberately avoiding addressing the actual question at hand, which I think they could easily do if they wished, but conspicuously don’t.

The first four paragraphs are all straw man stats, given that Obama was speaking of people $250k+. They acknowledge as much when they then write, “It’s important to note as well that these estimates apply to capping the itemized deductions of all taxpayers, not merely those who make more than $250,000.” In other words, all the numbers they had just presented re: the math of capping deductions were irrelevant to the president’s assertion, or at least unusable for assessing the validity of the president’s assertion.

They then get into the progressivity of such caps, but first of all, they speak of the share borne by the top quintile and by the top 1% rather than the president’s reference point of $250k+. Why? Why not at least include the numbers for that reference point if that’s what they are seeking to invalidate? Moreover, pointing to the progressivity of the dollars overlooks the greater burden of a given dollar amount on middle income earners. Which is why, again, the most obvious and sensible approach would be to simply assess the president’s assertion and answer the question: How much revenue could we (mathematically, within the constraint of realistic assumptions, political and economic) generate by reducing deductions, etc.., (via a cap, if WSJ wishes) on those $250k+, and does this amount reach the amount Obama seems to be calling for?

Why don’t the WSJ editorial guys answer that simple question? I guess because they don’t want to actually try to refute what they are claiming to refute, perhaps because they can’t.

Oh, and per the WSJ editorial, if I take their representation of the analysis as valid, a $50k cap on all itemized deductions would yield $749 in additional revenue, and the top 1% of earners would pay 79.9% of that. So, assuming the figures apply even if the cap were only on the top 1%, then in such a scenario the additional revenue would be only $598 billion (less per dynamic analysis, but that doesn’t seem to matter for this purpose, assuming WSJ is correct that his “about a trillion” that he seeks is also based on static analysis). $598 billion is well short of the “about a trillion” dollars the president is speaking of, which means that, at least for the top 1%, the WSJ is saying the math wouldn’t work.

But it seems (based on the president’s remarks) that the $250k+ segment is the top 2%, not the top 1%. It’s possible the percentages are referring to different things, but I don’t know, and apparently WSJ editorial folks decided not to make it clear, nor to make clear, if there is a real difference, how much would be raised from just those earning $250k+, which is what the president is talking about.

My guess: Some of the players are thinking of exposing employer-paid health insurance to taxation. That would bring the total over $1T with plenty of revenue to spare.

Taxing health benefits would show up immediately in lower net paychecks, so Congress would likely phase in that change somehow. They might take the same approach as ObamaCare: allow a modest amount to be free of tax, but don’t index that amount. Over time almost everything would become taxable. (For example, if the personal exemption had remained at the $600 level of 1960, it would be virtually worthless today.)

Non-indexation with the purpose of eventual full taxation is what Congress explicitly did with SS benefit taxation in 1983. Arguably it’s what Congress did with the rental loss rules in 1986, the AMT’s disallowance of state and local tax deductions in 1986, and even the Section 121 housing gain exclusion in 1997. All those non-indexed provisions were enacted when inflation was significantly higher than it is now, making the intent of slow-motion repeal harder to conceal.

…and as follow-up to my second paragraph, even if a $50k cap applied to everyone, they are saying that would yield only $749 billion, so presumably limiting it to the top 2% would yield less, and not close to a trillion. (I’m assuming the time periods being referred to are the same.).

What about a $25k cap or a $17k cap applied only to those $250k+? Well, one would think someone trying to invalidate Obama’s assertion via that approach, would state that a trillion dollars (or more) would be generated (at least per static analysis) by applying such a cap to that segment. But the WSJ editorial folks don’t. That raises reasonable suspicion that they don’t because they can’t.

All the claims of impossibility of meeting revenue goals share the deficiency of the first TPC study: they don’t look outside a narrow box. The history of grand bargains is that the solution is always outside the initial box.

Tax Reform in 1986 was enabled by disallowance (actually suspension) of rental property losses, an idea that was very much outside the box.

“They then get into the progressivity of such caps, but first of all, they speak of the share borne by the top quintile and by the top 1% rather than the president’s reference point of $250k+. Why? Why not at least include the numbers for that reference point if that’s what they are seeking to invalidate?”

Brooks,

You are making a big deal out of nothing. The numbers are based on the TPC study (”simple math”). The WSJ did not break it out per the $250K limit for the simple reason that that is not how the TPC presented it. Those earning above the $250 threshold represent about the top 2 percent of taxpayers by income. See footnote 3 of the following distribution table:

Note that the rather artificial break point is not per se $250K but is $200 K for single filers. Why that should be written in stone in the first place is a mystery to me, other than the fact that Obama has made it as an unrealistic campaign promise given his corresponding promise not to significantly cut spending.

The idea is simple: reducing and eliminating tax expenditures can be done in a manner that satisfies both socking it to the “rich” and raising an equivalent amount of revenue that Obama’s own idea of raising marginal rates would. If necessary, the formula can be adjusted to satisfy your apparent need for purity and to stick to a script nobody has agreed to in the first place.

The WSJ editorial claimed that Obama’s is wrong when he says that we can’t raise about a trillion dollars in extra revenue by reducing/eliminating deductions on those earning $250k+. Did it provide a supporting argument? If so, what is it?

And no, I don’t need “purity” in the sense of a specific number from a study for $250k+. But I need at least something from which one can infer that the president is incorrect. WSJ offers data showing that a $50k cap doesn’t come close to a trillion even if applied to everyone, let alone if limited to the top 1% (or, by inference, top 2%), so $50k doesn’t work. And they offer revenue figures that do exceed a trillion for caps of $17k or $25k, but those figures are for applying the caps to everyone. If they are implying that we can infer from those figures that limiting them to the figure on which Obama was basing his assertion (which they are claiming to be refuting), $250k+, they should say so, and explain. For example, they write, referring to a cap on everyone:

Reducing the annual deduction cap to $25,000 would raise an additional $1.286 trillion over 10 years.

Well, if we can use that figure for a scenario in which that cap applies only to the $250k+ segment, then that segment would have to pay at least 78% of that $1.286 trillion to yield at least one trillion. If that’s a safe assumption, they should say so. And if it is indeed a safe assumption, then, given that they didn’t say so, maybe those editorial writers are in the wrong profession. FWIW, it seems that the top 1% would pay less than 78%, given that (per the editorial) they would pay 79.9% of extra revenue from a $50k cap, and presumably a significantly lower percentage of a $25k cap.

Re: Note that the rather artificial break point is not per se $250K but is $200 K for single filers. Why that should be written in stone in the first place is a mystery to me, other than the fact that Obama has made it as an unrealistic campaign promise given his corresponding promise not to significantly cut spending.

Vivian, the point here (and one you might want to remember), is not that $250k is some magical number, but rather the simple, general point that, if one is claiming to be refuting an assertion, one’s supposed refutation should pertain to that assertion. If they’re saying Obama’s assertion is wrong, and if his assertion pertains to $250k+, then that’s what a refutation should address. Anything else is a straw man.

Lest you point out that the WSJ was not speaking of a trillion, but merely disputing the premise that “closing tax loopholes for the wealthy wouldn’t provide enough revenue for a budget deal”, here’s what they wrote:

‘You know, the math tends not to work,” declared President Obama at his Wednesday press conference, as part of his explanation for why closing tax loopholes for the wealthy wouldn’t provide enough revenue for a budget deal.

But Obama’s “the math tends not to work” was in direct reference to “about a trillion dollars” of revenue. From the transcript:

PRESIDENT OBAMA: I think that there are loopholes that can be closed, and we should look at how we can make the process of deductions, the filing process easier, simpler.

But when it comes to the top 2 percent, what I’m not going to do is to extend further a tax cut for folks who don’t need it, which would cost close to a trillion dollars. And it’s very difficult to see how you make up that trillion dollars, if we’re serious about deficit reduction, just by closing loopholes in deductions. You know, the math tends not to work.

Is that “about $1 trillion”? Why did you change $823 billion into “about $1 trillion”?

And, here is what they further wrote:

“In other words, the rich would still be soaked and the middle class would largely be spared. Is that enough tax fairness for you, Mr. President?”

What part of that do you not understand?

Of course, these estimates (the TPC and the JCT) are *before* any macro effects of these differing tax change policies. Query: ceteris paribus, would increasing marginal rates have the effect of reducing GDP (and indirectly have an effect on tax revenues)? How would that compare with reducing tax expenditures? Why would one *not* first reduce expenditures before even considering raising marginal rates *on anyone*?

Brooks, the point here is (and one that you might want to remember) is that the Obama “plan” for soaking the rich in this respect was to the tune of only $823 billion, per the JCT. Do you disagree with that?

Perhaps by “close to a trillion” you were merely accepting as fact the President’s rhetoric. Why would you do that? Perhaps the next time you should read that rhetoric more skeptically. To the credit of the WSJ, they at least accurately cited the JCT.

I missed that part, and you are correct to point out that part of their argument. I don’t know whether or not that figure relates to what Obama is talking about, but if a give them the benefit of the doubt and assume it does (rather than being apples to oranges), then that is an important part of their argument.

That said, I ask again: if you are saying that they offer a supporting argument — even for a claim pertaining to $823 billion rather than one trillion — what is their argument? How should one be able to clearly infer from the figures they offer that capping deductions for the $250k+ segment at $50k or $25k or $17k would yield that $823 billion (or more)? Are there some assumptions that should be obvious as safe assumptions, and that allow such an inference?

“That said, I ask again: if you are saying that they offer a supporting argument — even for a claim pertaining to $823 billion rather than one trillion — what is their argument? How should one be able to clearly infer from the figures they offer that capping deductions for the $250k+ segment at $50k or $25k or $17k would yield that $823 billion (or more)? Are there some assumptions that should be obvious as safe assumptions, and that allow such an inference?”

Brooks,

I’m beginning to wonder if you can read. Take a few minutes and re-read that WSJ editorial. Take a deep breath and come back again without that straw man because he’s starting to lose his stuffing.

Here’s what the WSJ wrote:

“That’s barely more than the $749 billion from capping deductions at $50,000 a year. And at an annual average of $82 billion a year in revenue, it’s merely 7.5% of last year’s $1.1 trillion federal budget deficit. And that’s assuming no negative impact on revenues from slower economic growth due to higher tax rates on savings and investment. To borrow a phrase, “the math tends not to work.”

So, in effect, what we are talking about here is *$7 billion per year* (before macro effects) out of a $1.1 trillion deficit and perhaps a couple of insignificant percentage points on the distribution table. And you are calling that “discrepancy” a straw man?

A fair reading, I think, of the “math tends not to work” is that Obama’s proposal to raise $82 billion per year in additional tax revenue by soaking it to the rich really doesn’t begin to put a dent into the deficit problem. Any economist who is not a partisan hack will tell you that we should *first* look to reducing expenditures (on a “progressive basis” if you will) *before* talking about increasing marginal rates, which is economically a less sensible choice. Keep that simple fact in mind before you trot out your straw man again.

As far as assumptions are concerned, ask the TPC and the JCT, the former of which I understand you have full confidence in their “simple math”. Assumptions did not seem particularly relevant to you in our prior discussion on a related topic.

First of all, just to dispense with some silliness, you write re: TPC, “Assumptions did not seem particularly relevant to you in our prior discussion on a related topic.”. Oh please. Don’t mischaracterize the views I express, particularly when your purpose is to imply bias on my part.

Now then, why are you using their $749 billion figure when you know that that figure pertains to a cap on everyone, not on only the $250k+ segment, which pertains to Obama’s “math” that they are claiming to refute?

How much revenue is generated relative to the size of deficits is irrelevant to the question of whether or not Obama’s assertion was correct. Not sure why you get into that, along with your equally irrelevant comment re: tax expenditures. Don’t shift to some other matters. We are addressing a particular question here: Does the editorial make a case that Obama is wrong in his assertion that we can’t generate the relevant amount — let’s say $823 billion — by reducing deductions on the $250k+ segment? If so, what is their argument? I keep asking you the same question, and I’m getting no answer. Do you have one, other than to use an irrelevant figure (that $749 billion, which is somewhat close, but would be a cap applied to everyone)? Again, if you think one should be able to make some fairly easy inference to that effect from the figures they present, what is it, and how do you get there?

Get real, Brooks, approximately 98 percent of the $749 figure applies to those earning above $250K (probably more if one considers that it is really $200K including singles).

The comment regarding tax expenditures is extremely relevant—it is what the entire debate is about—does it make sense to raise marginal rates *before* when exhausts that approach. You’re the one evading here, Brooks, not me.

Furthermore, Brooks, please point to the place where Obama says that restricting tax expenditures on the “rich” cannot raise at least $82 billion per year. Obama *never* made that assertion so there is no need to “rebut” it. Again, show me where he’s asserting that.

And, Brooks, are you arguing that if Obama’s put’s up a phony $1 trillion figure in a speech that someone has to take that as fact and rebut that? I think the WSJ already did that—by citing the JCT’s actual number of $823 billion. Wouldn’t that also be an example of showing that “his math doesn’t add up”.

For someone advising me to read more carefully, you really should practice what you preach.

First, re: your comment #67, did you somehow miss when I acknowledged that their $823 billion, assuming it is an appropriate figure for the purpose, is indeed an important part of their argument, and when I acknowledged that I had missed that, and that you were correct to point it out?? (And by the way, notice how readily I admit a mistake — much better than responding with irrelevances, straw men, non sequiturs, attempts to shift to something else, responses that just ignore key questions asked, etc.). In case you think (for some reason) I haven’t been clear enough, no, no one has to accept the $1 trillion figure to refute Obama’s assertion; if one believes thath a key premise of his argument ($1 trillion) is invalid, that is of course, fair game. I missed that $823 until you pointed it out to me. I accepted it for the sake of argument, and argued that, nevertheless, I don’t see an argument in the editorial that $823 could be generated, and I asked you to tell me where there is such an argument in the editorial. All I’ve gotten is an apparently inapplicable $749 figure, followed by an apparently mythical 98% figure what would make the $749 figure applicable if it were valid.

And speaking of answering questions, let’s see if you’ll be so kind as to answer mine below.

1. Where are you getting that “98 percent of the $749 figure applies to those earning above $250K (probably more if one considers that it is really $200K including singles)”? The editorial itself says the following, which is backed by the TPC table to which you linked:

the Tax Policy Center also did the math for the distribution tables for this deduction cap when they were trying to defeat Mr. Romney. And, lo, they found that the top quintile of income earners would pay 96.2% of the higher taxes if deductions were capped at $50,000. The top 1% of earners would pay 79.9% of the higher tax revenue from capping deductions

So am I missing something? Where did you get 98%? The top quintile includes many more taxpayers than the $250k+ segment (per the TPC footnote, unless I’m mistaken, the top 5% begins at $227,595), yet would only pay 96.2%, right? So where do you get 98%?

And again, FWIW, applying the figures in the editorial, the “top 1%” would pay $598 billion of that $749 billion. $598 isn’t $823.

Per TPC, if I’m reading the table and footnote correctly, the top 5% starts at $227,595, and the top 5% would pay 90% of the extra revenue from a $50k cap*. This translates to $672 billion, and includes more revenue than would the $250k+ segment (because it starts at $227.595). Even $672 isn’t $823, and however much lower it would be for only $250k+, the further from $823 it would be. So $50k cap doesn’t seem to be a refutation of Obama’s assertion. Perhaps $25k or $17k would be, but I don’t know from the WSJ editorial, nor, moreover, would I have been able to infer the above from it either. Again, do you see in the editorial something from which we can clearly infer that Obama was wrong re: the “math”? If so, what is it?

Re: tax expenditures, don’t confuse my obvious meaning when I said that matter was irrelevant. Obviously I don’t mean irrelevant to the entire policy discussion. I mean irrelevant to the question you and I are discussing, which is whether or not the editorial refutes Obama’s assertion about the “math”. Hopefully that’s a distinction you can make, at least after having it pointed out to you now twice.

Re: please point to the place where Obama says that restricting tax expenditures on the “rich” cannot raise at least $82 billion per year. Obama *never* made that assertion so there is no need to “rebut” it. Again, show me where he’s asserting that.

Again, Obama said:

PRESIDENT OBAMA: I think that there are loopholes that can be closed, and we should look at how we can make the process of deductions, the filing process easier, simpler.

But when it comes to the top 2 percent, what I’m not going to do is to extend further a tax cut for folks who don’t need it, which would cost close to a trillion dollars. And it’s very difficult to see how you make up that trillion dollars, if we’re serious about deficit reduction, just by closing loopholes in deductions. You know, the math tends not to work.

Obama is refers to “loopholes and deductions”, and so does the editorial (you have introduced the term “tax expenditures”, but we should stick with what was discussed in the editorial and the relevant Obama remark). He is saying it seems at least unlikely that “close to a trillion” could be generated by reducing deductions for the $250k+ segment (which, in context, is what he means by the top 2%). You pointed out the $823 billion figure (rather than “close to a trillion”), and I accepted that $823 for our purposes. I don’t see why you are questioning what Obama seems to have obviously asserted.

…oh, and Vivian, if I may anticipate an incidental misinterpretation by you that you’d probably point out as a supposed error by me, no, I’m not confusing top 5% with top quintile. I offered a figure for top 5% to make a point about the top quintile (top 20%). If the 5% starts at $227,595, the top quintile starts much lower, and thus includes many more taxypayers than the $250k+ segment, yet that quintile would pay only 96.2%, so your 98% paid by the $250k segment doesn’t seem to fit.

To be tediously (for me) clear, no, Obama didn’t say we couldn’t generate $823 billion. He said close to a trillion. The editorial set the lower standard of $823 to suffice as refutation of Obama’s assertion, and I’ve accepted that for our purpose. The editorial must then meet it’s own (lower) standard — $823 billion. It is quite silly for you to say that, just because Obama didn’t state that lower standard for refutation, the editorial can claim to be refuting Obama’s assertion without even refuting it per their own, lower standard.

If you don’t believe the Wall Street Journal, then perhaps you will believe the Tax Policy Center. The issue is whether one can achieve at least $82 billion in tax revenue by eliminating or reducing tax expenditures for the “rich”.

Remember that the TPC did an initial analysis of the Romney proposal to do just that (but also to cut tax rates by 20 percent across the board from current rates).
What the TPC did was assume that $360 billion per year would need to be raised by reducing or eliminating tax expenditures and that most of that would need to come from the “rich” (using the Obama definition).

They took all the tax expenditures (about $1.3 trillion) and then eliminated all those they assumed were connected to “savings or investment” or would otherwise be “off the table”. They also assumed that the “value” of eliminating those expenditures would be reduced because tax rates would be reduced by 20 percent. After these adjustments, they concluded that the remaining potential value was $551 billion per year for all taxpayers.

The TPC concluded that of the necessary $360 in additional revenue, about $160 billion could come from “the rich” per year (I’m eyeballing Figure 2).

We now know that an across the board tax cut of 20 percent in rates (from current law) is off the table. Therefore, the above estimate of the TPC is also vastly understated because they figure a higher marginal rate (say 35 percent versus 28 percent) makes it easier to meet the revenue goal by reducing tax expenditures.

So, what we are asking here is whether it is feasible to reduce tax expenditures for the “rich” to the tune of $82 billion per year. The TPC has already concluded that one can do so to the tune of at least $160 billion per year. And, that estimate assumed that all expenditures for savings and investment were “off the table” and also assumed a 20 percent reduction in marginal rates as a basis for making that estimate. If we increase the $160 billion by 20 percent, that would be about $200 billion per year. I submit that that is greater than $82 billion per year.

Another thing to keep in mind, Brooks, if you care to respond to my last comment, was that Obama was not, to my knowledge, making any assertion regarding the WSJ editorial (which had yet to be written). I doubt seriously he was responding to Mankiw, either (or me).

What Obama rather evasively did was:

1. Refer to a bogus $1 trillion; and

2. Said we could not make *that* amount by eliminating “loopholes” on the rich (whatever that term “loophole” was intended to mean).

In fact, even if we accept that (sorry to borrow your term) “straw man” $100 billion per year and graciously read the “straw man” “loophole” remark to mean “tax expenditure” , the TPC study, which you’ve already accepted as credible, has shown it is quite feasible indeed, even under much less favorable assumptions than are now appropriate.

I meant to write in the comment at 5:09pm that the TPC assumed a *lower* marginal rate of 28 percent rather than 35 percent. This reduced their estimate of the amount of revenue that could be raised by reducing tax expenditures as reported in that study.

I don’t know if it’s deliberate on your part, but you often go off in different directions rather than dealing with a particular question at hand. Please try to focus.

Again, our question is: Does the editorial make the case that at least $823 billion can be generated by reducing “loopholes and deductions” on the $250k+ segment? If you think it makes that case, how? Even if it isn’t explicit, have they offered something from which a clear inference to that effect is evident? If so, what/how?

You can dance around with all kinds of diversions, intentional or not, but I’ve been asking you this question repeatedly, and again, all I’ve gotten is an apparently inapplicable $749 figure, followed by an apparently mythical 98% figure what would make the $749 figure applicable if it were valid. I ask you very clearly — even bolded — where you get that 98% figure, and you respond with a diversion while ignoring my question (something you often do, I must say). Where did you get that 98%? You told me to “get real” when you offered up that figure, yet, when I point out my reason for doubting it, you won’t even respond when I ask you where you got it from.

Now, another, separate question, aside from the editorial, is whether or not Obama’s claim is valid. We can explore that, too, but don’t conflate it with the question re: the editorial and the argument (or lack thereof) within.

And by the way, it isn’t that I “don’t believe the Wall Street Journal”, it’s that I don’t see an argument from them that supports their claim to be refuting Obama’s assertion. And I’m still waiting for you to answer my question by telling me what argument you see, without using an inapplicable figure ($749 billion) and a mythical, apparently grossly invalid, assumption (98%). Any chance you’ll do so??

Re: Obama was not, to my knowledge, making any assertion regarding the WSJ editorial (which had yet to be written)

Well, sure, but I have no idea what your point is.

Re: What Obama rather evasively did was:
1. Refer to a bogus $1 trillion; and
2. Said we could not make *that* amount by eliminating “loopholes” on the rich (whatever that term “loophole” was intended to mean).

I guess you somehow didn’t understand (or didn’t read) or are pretending not to understand what I said. Obama’s “$1 trillion” is irrelevant for our purposes at this point. I’ve accepted, for the sake of argument, the $823 billion figure as the (lower) standard that the editorial would have to meet to refute Obama’s assertion. As I said, it’s absurd for you to imply that, because a lower standard suffices for an effort to refute Obama’s assertion, the editorial doesn’t have to meet that (it’s own) lower standard. Are you really not getting that?

Don’t assume you are the only one allowed to set the parameters of the discussion here.

Yes, 98 percent was a mistake–it appears to be somewhere between 80 and 84 percent.

The WSJ wrote this, which I’ve already quoted above:

“And, here is what they further wrote:

“In other words, the rich would still be soaked and the middle class would *largely* be spared. Is that enough tax fairness for you, Mr. President?”

I think that’s accurate and pretty straight-forward.

What you’ve done is to take a quote out of Obama’s speech about $1 trillion from a different source ( a figure you admit is wrong) and then claim the WSJ was referring to *that* when they did not even reference it. The referenced the *correct* figure of $823 billion and the math comment was in the context of how far short that revenue comes up against the overall deficit.

Now, I don’t think the WSJ comment “largely” is wrong, nor do I think their assertion that Obama’s math is wrong. You can dispute their particular example if you want based on the “math” quote, but again I don’t think that was what they were referring to and you’re making a trivial objection in the face of a much more significant and relevant issue. The relevant issue, if I may again ask it again: Is it mathematically feasible to raise $82 billion per year by restricting the tax expenditures of the “rich”? If so, does this mean that Obama’s math is “wrong” that it is impossible to generate $82 billion per year by reducing them (or even if we accept it as $100 billion per year)?,

I’m only “setting the parameter” for a point that I made, which you disputed, and for my request that you show me why you think I’m wrong. It’s silly for you to make it sound like I’m being unreasonable for trying to get an answer from you on a particular point rather than letting you skip off in some other direction, particularly after you first dispute my point for a while with arguments that appear, for reasons I’ve given, not to hold up.

Glad you admitted that 98% was a mistake. It shouldn’t take repeated requests for you to admit a major mistake. In the future, please just admit it when asked.

Re: the editorial’s argument, “Is that enough”, it is irrelevant to our question. The editorial claims that Obama (his “math”) is wrong with regard to a particular claim he made. Even adjusted to a lower standard required for refutation ($823 billion rather than a trillion), the question is whether or not the editorial makes that case or not. I’ve asked you over and over and over again: Do you see such an argument in the editorial? Still no answer from you.

Perhaps your (unstated) argument is that one should infer that, if the top 1% would pay 79.9% of the $749 billion in extra revenue from a $50k cap on everyone, and that would be $598 if it applied only to the top 1%, then we can assume that a $17k cap on the $250k+ segment would generate at least about $823 billion. Would that be your argument, if you were to actually make one (i.e., if you were to actually answer my question)?

Re: your remark about the $1 trillion, you are really just not getting it. Let me try this way:

1. The WSJ editorial claims Obama’s math is wrong, in part because $823 billion is the appropriate figure (rather than Obama’s trillion).

2. To show Obama to be wrong, the editorial would have to show that at least $823 billion could be generated via reducing “loopholes and deductions” on the $250k+ segment.

3. I don’t see an argument to that effect in the editorial.

4. For some reason, you think that, because the editorial establishes a lower standard for how much extra revenue would have to be generated to show that Obama is wrong, the editorial doesn’t have to meet it’s own lower standard to make that argument.

I think appropriate etiquette would have it that you — after all this attempted tooth-pulling by me — answer my question before we move on to yours.

So, for the millionth time, Do you see an argument — even something from which we should be able to make an inference — in the editorial that $823 billion (or more) could be generated by reducing “loopholes and deductions” on the $250k+ segment? If so, what?

As for your question, I’ll be glad to try to address it after you give me the basic courtesy of an answer to my question. (I’m done for today, though, in any case).

Wow. What a back and forth. I’m just curious, why Brooks do you accept the argument that the $823 billion must be sacrosanct or that all tax increases must come rom people making 200/250k?

Reading this you are both making angels on pinheads arguments.

Perhaps we should agree to the following.

1. Reducing tax expenditures can raise money the same as increasing tax rates. It’s pretty clear from the TPC analysis that one could raise at least 2 trillion via that route.

2. Whether $68 or $160 billion per year, both numbers pale relative to the $1.4 trillion or so deficit assuming we choose not to go over the fiscal cliff.

3. The President is trying to set the terms of the debate by basically arguing that all tax increases must come from 2 percent of the population and implying that these increases will be sufficient to address our fiscal issues. The first point is an assertion without even a rationale. The second is factually incorrect

4. The WSJ argues, rightly in my view, that taxes can be raised by reducing tax expenditures and that the progressivity of a deduction cap is similar (and probably more realistic as a downpayment on what it is going to take) to the progressivity of the rate change.

5. Debating the difference in amount between the two plans is silly. Both are within the margin of error of the analysis.

6. Debating the progressivity isn’t a debate. Brooks continues to insist that all tax increases must come from the top 2% simply because the President says so. In my view, that’s not a debatable point. He did say so and his saying so doesn’t make it a convincing argument.

Re: I’m just curious, why Brooks do you accept the argument that the $823 billion must be sacrosanct or that all tax increases must come rom people making 200/250k?

I’m even more curious: Why do you attribute to me views that I haven’t indicated even in the slightest?

As for the rest of your comment, apparently you aren’t grasping at all what it is that I am trying to discuss with Vivian. Hint: It has nothing to do with what is better or worse policy, nor anything else you’ve mentioned.

Lastly, albeit redundantly, re: Brooks continues to insist that all tax increases must come from the top 2% simply because the President says so.

Steve, the next time you feel the urge to take the liberty of characterizing some view you think I’ve expressed (let alone something you think I “continue to insist on”), please get a clue. Where did I express that view?

If you can’t point to where I’ve expressed these views you are attributing to me, feel free to be decent enough to admit that you’ve erred. I sure would if I were in your shoes, and I’d add an apology, not that I’m requesting one.

Oh, and re: In my view, that’s not a debatable point. [The President] did say so [that all tax increases must come from the top 2%] and his saying so doesn’t make it a convincing argument.

No one here is debating whether or not the president said that.

Steve, I can certainly forgive someone for not wanting to read through a long exchange between two others, and occasionally I’ll jump in without doing so, and my (non-specific) recollection is that in doing so on a couple of occasions I’ve missed something important that someone has to point out to me. But you really should try not to get the whole thing wrong, completely missing what the question being debated was (despite my repetition of it, even repeatedly bolding it), and falsely, completely baselessly attributing supposedly persistently expressed views to someone as you’ve done here, not to mention doing it all with criticisms of the views expressed (”angels on pinheads”; “silly”) when you obviously have no (correct) idea what the exchange was about or what the relevant arguments were.

“1. Reducing tax expenditures can raise money the same as increasing tax rates. It’s pretty clear from the TPC analysis that one could raise at least 2 trillion via that route.”

Yes, and more directly to the point, reducing tax expenditures can raise as much or more money than the President’s proposal to raise $82 billion per year and do it in a manner that is sufficiently progressive to meet his previously stated criteria. A sensible way to eliminate any pinheads argument would be to set a revenue goal, agree to eliminate those tax expenditures “on the rich” to meet that goal, and if the JCT comes up with a lower revenue estimate than the goal, agree to raise the marginal rate to make up the difference. Then spending will then (or even first) need to be massively cut to make any significant dent in the deficit. The administration has made an untenable promise to the electorate that was successful politically, but that has disastrous fiscal consequences: “We won’t raise taxes on (or raise revenues from) the middle class and we won’t dramatically cut spending”. The administration knows this “math does not add up” (meaning, here, Brooks, that you can’t not raise taxes on the middle class and not make drastic spending cuts in the face of $1 trillion plus deficits). What I suspect now is going on is that the administration knows this (they knew it all along) and the gambit is now to raise the revenue target on the top 2 percent and that’s why there is opposition to replacing rates hikes with tax expenditure cuts. They want *both* but are not saying so explicitly. To paraphrase the TPC, it’s tough to know if the math adds up if you don’t know the plan. But, here, just like the TPC attack on Romney, we’re taking Obama at his word. He’s still a sitting president and no longer a political candidate so there is even more reason to do so.

“2. Whether $68 or $160 billion per year, both numbers pale relative to the $1.4 trillion or so deficit assuming we choose not to go over the fiscal cliff.”

Right, and I have previously stated and quoted the WSJ that made exactly this point. (I won’t make the pinhead argument that the WH projection for 2012 is $1.33 trillion which is in the range of the objection to the WSJ comparison). In fact, the “math doesn’t add up” comment was in that context, a fact that Brooks has failed to acknowledge and instead wishes to impute his own interpretation on that by bringing in a quote that the WSJ didn’t even mention.

“3. The President is trying to set the terms of the debate by basically arguing that all tax increases must come from 2 percent of the population and implying that these increases will be sufficient to address our fiscal issues. The first point is an assertion without even a rationale. The second is factually incorrect.”

Right, and see above. As to the first assertion, per Brooks, the President is saying that reducing tax expenditures on the “rich” can’t meet his revenue goal (which seems to be moving all the time). It is telling that the burden of proof is not on the President (our elected leader) to support that assertion.

“4. The WSJ argues, rightly in my view, that taxes can be raised by reducing tax expenditures and that the progressivity of a deduction cap is similar (and probably more realistic as a downpayment on what it is going to take) to the progressivity of the rate change.”

Right again.

“5. Debating the difference in amount between the two plans is silly. Both are within the margin of error of the analysis”

Agreed (more on this below).

“6. Debating the progressivity isn’t a debate. Brooks continues to insist that all tax increases must come from the top 2% simply because the President says so. In my view, that’s not a debatable point. He did say so and his saying so doesn’t make it a convincing argument.”

Well, whether it is a “debate” is debatable, but it is a debating tactic, and when that both Obama and Brooks seem well familiar with. The tactic is to fence off the parameters of what should be a serious policy discussion in a fashion that supports your side of the debate and stick to that like a ferret.

“Reading this you are both making angels on pinheads arguments.”

Steve, I’ve not been making “angels on pinheads arguments”. What I made the mistake of doing is responding to them, a mistake that you and others here have previously made. I started this thread by noting that we can and should meet that revenue target by reducing tax expenditures rather than increasing tax rates, principally because this is the best tax *policy* and makes the most economic sense. And, I’ve also argued that this can be done without sacrificing progressivity of the code and even to make it more progressive than it now is.

The WSJ has made the same principled argument in response to Obama’s rigid stance that marginal rates need to be increased to meet *his* revenue goal.

Brooks,

“…you aren’t grasping at all what it is that I am trying to discuss with Vivian. Hint: It has nothing to do with what is better or worse policy, nor anything else you’ve mentioned.”

Perhaps rather than leaving hints you would be so kind as to concisely state the point you *are* trying to make. Apparently, you do not take issue with the following in the WSJ editorial:

1. The President’s own revenue plan for raising taxes on the rich per the JCT would raise $82 billion per year;

2. The WSJ gave an *example* from the TPC calculations showing that capping deductions at $50K would raise $75 billion per year (before macro effects) and that this would *largely* fall on the middle class (their characterization);

3. That in either case this is peanuts in the face of deficits well in excess of $1 trillion per year.

I doubt you disagree with the above , so I am guessing your “point” is that the WSJ’s *example* was “off ” by $7 billion per year (a fact they clearly did not hide) and that a small percentage of that (the opposite of “largely”) would fall on the “middle class” (as defined by Obama) so that their comment “his math doesn’t add up” is inappropriate (even though I’ve argued you are taking it out of context). Is that your point? If it is, then it truly is an “angels on pinheads” argument. I’ve raised a serious policy discussion and you’ve responded by another game of Trivial Pursuit and in your own words with arguments that “have nothing to do with what is better or worse policy. ”

You’ve made two points, one about numbers and one about distribution. You’ve agreed youmwere wrong about the numbers already so onto distribution. The entirety of your debate with VD seems to rest on the fact that increasing taxes via tax expenditure changes comes in part from people making less than 200/250. So what unless you start from a premise that all increase must come from those above that threshold.

As to the rest of your obnoxious claptrap, nothing more than par for the course.

Wow, that’s real chutzpah. In the beginning, I make the point that the editorial claims to be refuting Obama’s assertion, but offers no supporting argument. You dispute my view of the editorial, so I ask you to tell me what argument you see in the editorial to that effect, or even to tell me what the editorial offers from which we can infer that Obama was wrong. I’ve asked you over and over and over again — even bolding the question repeatedly — and you’ve offered (and ironically snarkily) only a figure that doesn’t answer the question (the $749 billion figure, which you knew pertains to a cap on everyone, not limited to the segment in question, $250k+); another figure (”98%”) you apparently just fabricated to make the $749 billion figure into a real answer, while insisting that I “get real” and accept your phony “98%”; a persistent and obviously absurd argument that, because Obama said “close to a trillion” rather than $823 billion, the the editorial does not have to meet even the $823 standard (a lower standard, set by the editorial itself) to refute Obama’s assertion; a variety of irrelevancies; and at some point, a separate question of your own, which I said I’d be glad to try to address after you give me the basic courtesy of finally answering the question I asked first and which you had been disputing (albeit while failing/refusing throughout to offer any real answer to my question).

…and now, you actually have the nerve and/or inexplicable confusion to claim that I’m the one playing games by not answering your question???

And then you write:Perhaps rather than leaving hints you would be so kind as to concisely state the point you *are* trying to make.

Vivian, at one point you questioned if I can read. I have to question if you can read bolded sentences, not to mention repeated statements.

For the millionth time, my point is that the editorial does not provide an argument (that I can see) supporting their claim that Obama (his “math”) was wrong. In other words, I don’t see in the editorial an argument (or even something from which we can infer) that reducing “loopholes and deductinos” (via capping them, as the editorial suggests, or otherwise) on the $250k+ segment would generate at least $823 billion. (I’m adopting their lower standard of $823 billion for the sake of argument).

You’ve been disputing that view of mine of the editorial. So I ask you, yet again:

If you DO see such an argument, or even the basis for such an inference, in their editorial, what is it?

That’s the question I’ve been asking you all along, and the one that you have been failing or refusing to answer in any real way.

And as for that “$75 billion per year”, which is the aforementioned $749 billion (10 year) figure, again, that is for a cap that applies to everyone. I’ve pointed out repeatedly that, per the editorial, citing that TPC analysis, the top 1% would pay 79.9% of the extra revenue under that $50k cap, which is $598 billion. As I’ve indicated, $598 is NOT roughly equal to $823. You’ve said (and I’ll accept here just for the sake of argument) that the percentage for the $250k+ segment “appears to be somewhere between 80 and 84 percent.” Well, even granting you that premise for the sake of argument, 84% of $749 is $629. Even $629 billion is NOT roughly equal to $823 billion. And it doesn’t become so merely because you point out, irrelevantly, the size of deficits.

So re: I am guessing your “point” is that the WSJ’s *example* was “off ” by $7 billion per year

I’ve explained the inadequacy I see in the editorial, and I’ve repeatedly asked you to show me what you think I’m missing. Again, they offered $598 billion from the top 1% for a cap of $50k. Although they didn’t help us from there, you — on whatever basis, but apparently not on any basis from the editorial — say, in effect, that your high estimate of what the relevant segment ($250k+) would pay could be $629 billion. Well, even that figure, which you apparently derived from information outside the editorial (combined, I assume with some sort of interpolation and/or assumptions you are making), is still NOT roughly $823 billion, so it does NOT support the claim that Obama’s math was wrong, which is the editorial’s claim. That said, as I said in an earlier comment, pasting again here: Perhaps your (unstated) argument is that one should infer that, if the top 1% would pay 79.9% of the $749 billion in extra revenue from a $50k cap on everyone, and that would be $598 if it applied only to the top 1%, then we can assume that a $17k cap on the $250k+ segment would generate at least about $823 billion. Would that be your argument, if you were to actually make one (i.e., if you were to actually answer my question)? I don’t know if that would yield at least roughly $823 billion, and the editorial doesn’t seem to help in that regard. Given that the editorial was claiming Obama’s math was wrong, it seems to me that the editorial should have provided some actual argument as to how we can get to a calculation or safe assumption that we could get to $823. I don’t see such an argument (and by the way, you’re quote of “largely” doesn’t get us there, either), and that was my point.

Lastly, re: I’ve raised a serious policy discussion and you’ve responded by another game of Trivial Pursuit and in your own words with arguments that “have nothing to do with what is better or worse policy. ”

I won’t make that mistake again.

Only a fool cannot distinguish between discussion of an analytical matter vs. policy advocacy, and cannot see any value in the former. If you don’t get, I probably can’t get you to get it.

Vivian, I suggest you try to learn to make at least simple distinctions among arguments (or, if not learning, getting in the habit of doing so, perhaps just by paying more attention and thinking a bit more), that you get in the habit of making a good-faith effort to answer a reasonable, pertinent question when asked, and that you shed your reluctance to admit when you are wrong about something.

Again, you attributed views to me that I haven’t indicated even in the slightest. My point with Vivian was that the WSJ editorial that she linked to claims to be refuting Obama’s assertion, yet does not seem to be offering any supporting argument for their claim. Vivian has disputed me on that, yet, and my persistent question to here is “Where’s the argument in the editorial, or even information therein from which we can draw an inference to that effect?”

That’s it. Get it? I was saying the editorial doesn’t make an argument for their claim, and, given that she disputed that view of the editorial, I’ve been asking her to tell me what argument she sees in the editorial for their claim. Again, that’s it. Get it?

It’s a point and a question that has nothing to do with anything you’ve said, and nothing in anything I’ve said indicates in any way the views you’ve attributed to me.

I’ve asked you to try to point to something I’ve said that you think shows that I expressed or even indicated those views at all. You haven’t, because you can’t, because there’s nothing you can point to that would back up what you’re saying, yet you still persistent with your obnoxious, baseless, false attributions. Unbelievable.

1. That you can raise an equivalent amount of money through tax expenditures. This claim is basically true within the tolerance of the analysis. Do you dispute this?

2. That the President was not being truthful with this “almost a trillion” comment. You’ve already admitted this.

3. Your entire argument rests on the notion of distributional analysis and that the two things aren’t equivalent because some (around 25%) of the money form a TE cap comes from people below the 200/250K level. My question is “so what?”

Unless you accept the premise that all money must come from people above that level, why does a small change in distribution matter? Implicitly, by making this argument again and again, you are accepting that claims.

I’ve now pointed to the rationale for my inference. You, on the other hand, have conveniently chosen to ignore pretty much everything that conflicts with your chosen point of view. Again, par for the course.

1. If, by “within the tolerance of the analysis”, you mean that the editorial lays out enough of an argument that it can be inferred that clearly at least roughly $823 billion can be generated from the $250k+ segment by closing “loopholes and deductions”, then yes, I’m disputing that the editorial does this. As I’ve said to Vivian, one could hold the view that, if the top 1% would pay 79.9% of the $749 billion in extra revenue from a $50k cap on everyone, and that would be $598 if it applied only to the top 1%, then we can assume that a $17k cap on the $250k+ segment would generate at least about $823 billion. But, conspicuously, the editorial doesn’t even make that inference from the figures it presents, even though that is key to it’s argument that Obama’s math is wrong. (And Vivian didn’t adopt that argument either.)

2. I haven’t “admitted” it. I’ve accepted it for the sake of argument. It happens to seem plausible to me, but I haven’t checked it out, because I’ve been asking what their argument is even if we accept that premise re: $823 billion as the lower standard they have to meet to prove Obama’s math wrong.

3. Huh?

Unless you accept the premise that all money must come from people above that level, why does a small change in distribution matter? Implicitly, by making this argument again and again, you are accepting that claims.

Huh? What in the world are you talking about. I haven’t been commenting at all re: where “all that money must come from” in terms of personal preference, nor am I “accepting the claim” that it must come from people in the $250k+ segment.

I’ll try (perhaps just one more time, because this is beyond ridiculous). Obama made an assertion that pertained to that segment (how much extra revenue could be raised by cutting “loopholes and deductions” for the $250k+ segment). The editorial claimed that his math was wrong. For the editorial to support that claim that Obama’s math was wrong, they have to do so with an argument pertaining to that segment. It’s not a matter of accepting that cutting deductions should be limited to that segment; it’s that a particular segment was referred to by the president in his assertion, and the editorial said his math was wrong, so that’s the segment their refutation would have to refer to. Do you really not get this??

I’ve now pointed to the rationale for my inference.

You’ve offered up only fabrications and nonsense, and a persistent demonstration of an inability to comprehend a fairly simple matter.

You, on the other hand, have conveniently chosen to ignore pretty much everything that conflicts with your chosen point of view.

So silly, and needless to say, untrue. I’ve directly addressed everything relevant that has been offered regarding the point I made and the question I asked and to which I have been seeking a real answer from Vivian. The closest she’s come to an answer is to — amazingly — offer up yet again a figure she knows is not what she’s making it out to be: not only arguing that $749 billion is close enough to $823 billion to support a claim that someone’s math is wrong, but offering that $749 billion when she knows it’s not the right number (because it pertains to a cap that would apply to everyone, not just the relevant segment).

The editorial claimed that his math was wrong. For the editorial to support that claim that Obama’s math was wrong, they have to do so with an argument pertaining to that segment.

And therein lies the crux of the disagreement. His math was wrong because $1 trillion isn’t $823 billion. When you talk about 79.9%, you are changing the argument to an argument about distribution as opposed to amount.

The rest is a debate on distribution. You are accepting the President’s POV that all increases must come from the 250K plus segment and asserting that the editorial must argue within this frame in order to be valid.

You are still being ridiculous, or at least ridiculously sloppy in this case.

No, obviously their point wasn’t just that Obama was wrong re:$1 trillion vs. $823 billion. That was just part of their overall point that Obama was wrong (due to two math errors, they claim) in his assertion that equivalent revenue of the tax increas(s) on that segment to which he refers cannot be achieved by cutting “loopholes and deductions” for that segment.

It’s pretty explicit in the editorial:

The President must be getting bad advice because his math is mistaken in two ways. He’s wrong on the revenue arithmetic of limiting deductions, and he’s also wrong in claiming that raising tax rates as he proposes would do much better.

When you talk about 79.9%, you are changing the argument to an argument about distribution as opposed to amount.

No, Steve, you are just still completely clueless (and clueless about your cluelessness) on this matter. Obama made an assertion obviously pertaining to a particular segment. The editorial claimed Obama’s assertion was wrong because his math was wrong. Yes, of course, to refute Obama’s assertion they have to present an argument pertaining to that segment. And no, my saying that in no way indicates that I accept that all increases should come from that segment as a matter of policy preference. How in the world are you still confused about this???

It is quite strange that you are persisting with such nonsensical and clueless argumentation. Obviously I’ve seen problems with claims and argumentation from you before, but this is exceptionally bad.

What arithmetic did the President do on “limiting deductions?” The answer is he did none. The editorial is pointing out that limiting deductions is a progressive change in the tax code. Your argument presupposes it must be as progressive as the President’s in order for the editorial to accuse him of making a math error.

And to use an argument you like. The words “math error” in current context don’t imply actual errors in math but errors in thinking. The President’s repeated claims of “It’s just math” should certainly make this clear by now. It’s funny how you insist on literal reading here whereas in the last thread you thought the work “ask” was entirely appropriate because everyone knows “ask” doesn’t mean “ask” in this context.

Well my friend, everyone knows that “math” doesn’t really mean “math” in this context. And the fact that you continue to insist that it does in this case but not in the last is almost “Krugmanian” in intellectual gymnastic ability.

As to your policy preferences, who knows what you believe. The vitriol with which you defend the President’s position certainly allows one to draw inferences but inferences can always be incorrect.

First of all, just to address what is arguably (though it’s had to choose) the silliest part of your comment, you write:

The vitriol with which you defend the President’s position…

You are really out to lunch. I made a simple assertion that an editorial to which Vivian had linked made a claim that they didn’t seem to be supporting with argument. Vivian disagreed. I asked her repeatedly to tell me what she thought their argument was. She engaged in all sorts of nonsense, and I called her on it. You show up and attribute views to me falsely and completely baselessly, and I called you on that. And you see in all this “vitriol” with which I “defend the president’s position”, which you imply is an indication that I probably support the president’s policy, as if someone can’t make an effort to address an analytical matter related to a policy discussion without advocating for a particular “side”. Geez.

Now then, onto your other, persistent silliness.

Again (and why this isn’t clear to you even at this point is beyond me) the president made an assertion. This assertion related to a particular segment. The editorial claimed he was wrong, because his math was wrong. It is nonsensical for you to argue that, to support their claim that Obama’s math was wrong, they don’t need to relate their argument to the segment to which Obama was referring in his assertion. If you don’t see that, well, I don’t think I can get basic logic across to you.

Just to point out how ridiculously you are confusing one of the things you are ridiculously confusing, let me boil this down for you:

1. Obama asserts that it doesn’t seem we can generate as much revenue from the $250k+ segment from “closing loopholes and deductions” as we can from raising tax rates on that segment as he proposes.

2. The WSJ editorial claims Obama’s assertion is wrong because his math is wrong.

3. You say that, to support their claim that Obama is wrong because his math is wrong, the editorial does NOT need to argue that as much revenue can be generated from that segment from closing “loopholes and deductions” as can be raised from the tax rate increase that Obama proposes. In other words, you are saying that they don’t need to argue that Obama’s assertion is wrong in order to provide a supporting argument for their claim that Obama’s assertion is wrong.

“I’ve explained the inadequacy I see in the editorial, and I’ve repeatedly asked you to show me what you think I’m missing. Again, they offered $598 billion from the top 1% for a cap of $50k. ”

“They”s didn’t offer anything. As far as I know, the WSJ is not negotiating with the President.

Furthermore, those affected by the Bush tax cuts for the rich as defined as those earning more than $200K/$250K would be somewhere between 2 and 3 percent, based on 2010 tax filings (likely higher now)–not 1 percent.

The WSJ editorial clearly stated that capping tax deductions at $50K would raise approximately $749 billion in tax revenue per the TPC. They did *not* claim that it would raise $820 billion. Further, the WSJ said this amount ($749 billion) would fall *largely* on the rich. They also stated that the $749 estimate was a static one, correctly surmising, I think, that the estimate is a low one.

There are two ways to look at the example. First, one could say (as I have) that the revenue estimate is $7 billion per year short and that the rest falls largely on the rich. Or, you can collapse the two and try to estimate the dollar sum that would actually fall on the “rich” as Obama defines them. Of course, as I and Steve have pointed out here, there is nothing magical about those thresholds.

I’ve explained all of that above before, at least once and probably twice. I’ve also pointed out that this was an example—I did not think that “math does not add up” comment was directed specifically at Obama’s $1 trillion reference, nor do I think they intended themselves to be limited by this readily available illustrative example of how much revenue *could* be raised by limiting tax expenditures–one that would be easily understood by (most) readers. As I indicated, the TPC data strongly suggests that other formulas to restrict tax expenditures by this class of persons can easily raise $82 billion. You might want to engage in a simple thought experiment whereby the deductions for the “rich” (only) would capped at an amount under $50,000. You could further work with the idea that the $749 billion estimate did not include restricting all available ‘tax expenditures”. Alas, I I sense that you are not open to the idea of entertaining such thoughts. *That* (by which I mean “all of the above”) is what you are missing.

If you wish to further your case against the WSJ “math” comment, I suggest that you write a letter to their editor. I think you need to keep it short and relatively civil if you want to have a chance of having it published.

The “maybe” in that column is not due to math—it’s due to politics and what some might perceive to be good policy. And, Gleckman restricts himself to the same relatively convenient example.

As I’ve indicated above, the TPC’s earlier analysis of the Romney plan indicated that there was about $160 billion per year available from eliminating tax expenditures on the rich. And, that estimate excluded all expenditures for “savings and investment” *and* assumed a tax rate of 28 percent rather than 35 percent. Therefore, the amount available from eliminating those expenditures just on non-savings and investment “on the rich” is far greater than $160 billion per year.

One should here distinguish between “mathematically impossible”, “numbers don’t add up”, “simple math”, etc., with *politics*. There are many people better than math than I am; however, I’ve never read in a math textbook that if something is “politically difficult”, it is “mathematically impossible”, but the latter seems to now be taken as a synonym in many quarters.

I agree that Marron’s post is very helpful and he tries very hard personally to keep politics out of his own posts. If the $1 trillion was meant to refer also to the estate tax, then, as far as I know, this is a relatively new interpretation of the “taxes on the rich” as heretofore used.

I think Marron once explained that the TPC is “non-partisan” because it is comprised of a number of persons who have differing ideological and political viewpoints. (corporations are people). If that is the justification, I would think “bi-partisan” would be the better choice of terms. You will also note that in respect of the column AMT cited by Marron is that this is Don Marron talking—not the TPC. The “views” expressed on that blog are those of the individual blogger and not the TPC (see upper right-hand corner of the TaxVox blog). In my observation, the “objectivity” of those posts varies quite a bit from poster to poster. So, what you see is Don Marron maintaining his impartial approach, but that is not really new. In my view, this distinction between personal views of TPC members of and the “non-partisan” views of the organization is one that is difficult to distinguish, but it seems at least the “official line” that this fire wall can be maintained. Those posting most often on TaxVox are leaning left, not right or even center.

Another useful contribution Marron made in that post to the discussion was an answer to a reader’s comment about why these revenue estimates tend to vary so dramatically. In short, it’s due to differing baselines, different macro economic assumptions and other micro economic assumptions inherent in the various models. In short, it is an admission that this entire exercise is *never* a matter “simple math”. Unfortunately, the idea that it is got started by TPC’s response to Romney’s plan during the campaign. The “simple math” meme was gleefully picked up on by Obama in the media and attack ads and certainly partially explains the use of the term more recently in response by the obviously partisan WSJ. It is now part of the political vocabulary.

I fault the TPC (and Marron, despite what I believe to be his general good faith in checking inevitable personal biases) for not making this point about the inherent subjectivity and imprecision of revenue estimating more forcefully earlier. Rather than pointing out the inherent limits to revenue forecasting, they downplayed it and certain individuals within that organization (notably Bill Gale) only re-inforced the idea in the media that revenue forecasting, specifically the forecasting on Romney’s plan, was “simple math”. In reality, the margin of error is enormous. A bit more humility on that point earlier by the TPC and its individual members would have been more constructive in a highly-contested political campaign, despite their reluctant and relatively futile attempts to subsequently walk back the certainty expressed in the original report.

Responding now to your Comment #93, pretty much everything you said is wrong.

You reply to my statement that ““I’ve explained the inadequacy I see in the editorial, and I’ve repeatedly asked you to show me what you think I’m missing. Again, they offered $598 billion from the top 1% for a cap of $50k” by saying:

“They” didn’t offer anything. As far as I know, the WSJ is not negotiating with the President.

Are you trying to be absurd? Obviously what I’m referring to (and this should be obvious from the context each time I said it) is what they offered their readers as supposed supporting argument for that claim.

those affected by the Bush tax cuts for the rich as defined as those earning more than $200K/$250K would be somewhere between 2 and 3 percent, based on 2010 tax filings (likely higher now)–not 1 percent.

You act like you are correcting something I’ve said or pointing out something new in our exchange, but you’re doing neither. I have said from the start (http://economistmom.com/2012/11/onward/#comment-95041) that indeed their 79.9% of that $749 billion figure (i.e., the $598 billion I calculated) was for the top 1%, and that the segment Obama was referring to was larger than the top 1%, in particular, it’s what I’ve been referring to as the $250k+ segment, and which I’ve noted that Obama also refers to (less precisely, apparently, but perhaps correct with rounding) as the top 2%. So basically you’re saying something I’ve stated all along: that, given that $598 billion would come from the top 1%, some larger amount (some larger portion of that $749 billion) would come from the top 2%, or more precisely, from the $250k+ segment (which I think refers to $200k AGI for individuals and $250k for families, but I’m not sure). How much larger is the key here (for a $50k cap, that is; ultimately if the editorial made the directionally easier case for a $17k cap that would suffice as offering some supporting argument for their claim). The editorial offers no assertion, let alone argument, that we can extrapolate or interpolate from that $598 for the top 1% from a 50k cap to their $823 billion from a 17k cap on the $250k+ segment, nor do they offer any similar argument for any of their other figures, nor (that I can see) for all their figures considered together, and that’s my point, and that’s what I’ve been asking you to point me to if you think such an argument exists in the editorial, and you persistently either dodge that question or offer up figures that you misrepresent as answers. And as a note, re: how much the $250+ segment would pay of that $749, you’ve said you think the high end of the range you consider likely is 84%. As I’ve pointed out to you, if I take, arguendo, the high end of your premise , that 84% of $749 billion is only $629 billion, which is well short of $823 billion, so even per the lower standard (vs. Obama’s “close to a trillion”) that the editorial set for itself, and even if they had added that argument (84%) or if a reader could be expected to approximate that assumption, it still would NOT constitute an argument that Obama’ assertion was wrong due to faulty math.

The WSJ editorial clearly stated that capping tax deductions at $50K would raise approximately $749 billion in tax revenue per the TPC. They did *not* claim that it would raise $820 billion.

Obviously. And obviously I’ve never implied otherwise. And obviously even if the $749 were $823 that wouldn’t have represented an argument supporting their claim, because, as they acknowledge, only 79.9% of it comes from the top 1% and they don’t present an argument or even an assertion that we can therefore assume that around $823 (or more) would come from the relevant segment ($250k+) from that $50k cap or even from a $17k cap. (I’m not saying there isn’t an argument to that effect; I’m saying I don’t see one in the editorial, nor anything in the editorial from which one should be able to make an inference to that effect, and for the millionth time, that’s my point here, which you seem to be disputing, yet you won’t respond (with anything that is what you claim it is, and that makes any sense) to my repeated requests to tell me where, in the editorial, you see such an argument or the basis for such a clear inference.

Further, the WSJ said this amount ($749 billion) would fall *largely* on the rich. They also stated that the $749 estimate was a static one, correctly surmising, I think, that the estimate is a low one.

Yeah, no kidding it’s static. And as they explain, that is apples to apples with the president’s approach, so it’s not like they are making it much, if at all, harder on themselves to make their case, as you seem to be implying. (Perhaps it would help them just a bit if they translated to dynamic scoring insofar as they assume that negative revenue feedback effect from a static dollar generated via a tax rate increase would be greater [in absolute value terms] than the negative revenue feedback effect from a static dollar raised via reducing “loopholes and deductions”.) Moreover, they aren’t “correctly surmising, I think, that the estimate is a low one”; a static estimate of revenue gain (from either a tax rate increase or reduction in deductions) would be higher than a dynamic estimate, because the revenue feedback effect would be negative, reducing the gain in revenue.

And re: “Further, the WSJ said this amount ($749 billion) would fall *largely* on the rich,” well, yeah, but more usefully for the purpose of my question than the vague term “largely”, they specified that 79.9% of it would fall on the relevant segment ($250k+), and that the top quintile (which includes many more taxpayers than the relevant segment) would pay 96.2% of it. I’ve pointed out all this to you before.

There are two ways to look at the example. First, one could say (as I have) that the revenue estimate is $7 billion per year short and that the rest falls largely on the rich.

Is this an Abbott & Costello “Who’s on First?” routine? You keep bringing back that supposed $7 billion differential, based on $749 billion (over 10 years) vs. $823 billion (over 10 years). But as I’ve pointed out to you over and over again, and as you’ve acknowledged, that $749 is for a cap on everyone, not a cap on only the relevant segment. So why do you keep reverting back to using that figure misleadingly? Have you forgotten that (as you eventually acknowledged after my repeated questioning of it) you were full of it when you told me to “get real” and accept your baloney claim that 98% of that $749 would come from that segment?

And what do you mean, “and that the rest falls largely on the rich”. It’s like you are compounding your error (or bullcrap) – first (obviously incorrectly) assuming/pretending that the editorial is saying that all of the $749 would be paid by the relevant segment, and then assuming the editorial is then saying that most of the difference between that $749 and $823 would be paid by that segment, bringing the total very close to $823. Total baloney on your part. Again, if a reader wants to use their figures relating to that $749 as a starting point, he/she can start with $598 from the top 1%, perhaps along with whatever other figures they offer and any other assumption he/she should be able to think of and consider safe assumptions, and if he/she can put some or all of that together and conclude that it’s likely that the relevant segment would pay around $823, then that’s the kind of inference I’ve been asking you about, but you still won’t respond with what basis (that makes sense) you see in the editorial for such an inference.

Or, you can collapse the two and try to estimate the dollar sum that would actually fall on the “rich” as Obama defines them. Of course, as I and Steve have pointed out here, there is nothing magical about those thresholds.

First, as I’ve said, of course there’s nothing “magical about those thresholds” from a policy preference perspective, but that’s obviously irrelevant to my point and my question re: whether or not the editorial offers a supporting argument for its claim that Obama was wrong because his math is wrong.

As for the approach, yeah, obviously. Again, what I don’t see in the editorial is an argument or basis for clear inference that the “closing loopholes and deductions” on the segment Obama is talking about could generate as much extra revenue as would the tax rate increases on that segment that he is proposing. That is what the editorial claims Obama is wrong about – either that, or, as I’ve suggested is also possible, they are basing the editorial on a big, foundational straw man, claiming that Obama’s math is wrong because he doesn’t see that enough (in the editorial writers’ eyes) of a universal cap on deductions would come from the top earners, as opposed to the more specific assertion Obama actually made, pertaining only to a particular segment.

I’ve explained all of that above before, at least once and probably twice.

Oh, I’m not questioning that you’ve been offering up such obvious nonsense, baloney, and irrelevancies throughout our exchange.

I could go on and point out yet more obvious nonsense in your comment, but this comment is getting too long and I’m wasting too much of my time with you on this, particularly given that you keep circling back to fundamental errors that I’ve already pointed out to you.

Just a couple more points.

First, as AMT has pointed out per Donald Marron, apparently $968 billion is the relevant figure, not the editorial’s $823.

Second, again, I said I’d be glad to try to address the question you asked (about if Obama was wrong, whether or not the editorial made any actual argument to that effect or provided the basis for such an inference) after you gave me the courtesy of some real answer to the question I had asked you regarding my initial point, which you had been disputing, but with no real answer to my question. You still haven’t, and you’ve offered up utter nonsense and irrelevancies, so at least at the moment I’m not inclined to try to address your question. FWIW, though, TPC data for a 17k cap (and 25K, as well as the 50k) is all at http://www.taxpolicycenter.org/taxtopics/Limit-Itemized-Deductions.cfm (under “Current Policy”). And of course there’s the theoretical possibility of totally eliminating deductions for the relevant segment, but that’s probably not at all realistic (politically) and also would need to be phased in (per Gleckman, see below), so unless we’re taking the word “math” hyper-literally as you do, someone is not necessarily wrong when they say “the math tends not to work” in this type of context simply because, technically, theoretically, purely literally, the math could work. Anyway, FWIW, with those caveats, a table there shows that , for a 17k cap under current policy, which the editorial says (citing TPC) would yield $1,747 billion if applied universally, the top 1% of tax units would pay 39.2% (which, putting the two together means $685 billion) and the 95th – 99th percentile would pay another 16.2% ($283 billion), totaling $968, which is roughly equal to the president’s standard, BUT that 95th percentile starts with tax units at $227,595, and I don’t know how to translate that roughly to the president’s segment, and moreover, there is still that matter of needing to phase it in, so we can’t just take those percentages and calculated amounts and assume that the amounts would hold if the caps applied ONLY to that segment. The revenue would actually be lower.

Lastly, all along I said that even my $598 billion figure (the $749 X 79.9%) was “assuming the figures apply even if the cap were only on the top 1%”, an assumption I made to be favorable to possibility that the editorial was making an argument or providing the basis for an inference to support its claim. It turns out my assumption was generous to them, because, as Gleckman points out in the piece to which you linked, “if Congress caps deductions for only the rich, it would need to phase-in such a change to avoid slamming someone with a big tax hike as soon as their income goes from $199,999 to $200,000. And that would reduce revenue even more.”

When you first initiated this rather silly discussion about “math” and I stupidly got dragged into it, you insisted the discussion was about “math” and not about “policy”. The WSJ editorial was in response to an Obama speech in which Obama indicated that it is not mathematically possible to raise as much revenue by reducing or eliminating tax expenditures from the “rich” as it would be to raise tax rates on them, as he proposes. The WSJ countered this with an editorial and an illustrative example. They indicated that *Obama’s* math did not add up, obviously throwing back in his face a phrase that was a key (thanks to TPC estimates) in his campaign against Romney.

You have come back to challenge that WSJ statement about the math. It was you who insisted that this is a question only about math, not about policy..

Now, you have pointed us to some revenue estimates and distributional estimates prepared by the TPC on various hypothetical scenarios. Thanks for that. You’ve taken as an example the TPC’s table with respect to capping itemized deductions at $17, 000. A couple of points about that:

First, why stop at a $17,000 cap? The TPC also did a table on eliminating itemized deductions altogether.

Second, that TPC hypothetical addresses only capping *itemized deductions*; it does not address capping many of the other “tax expenditures” that “the rich” currently enjoy. For example, it does not include any cap on deductibility/exclusion of health insurance benefits. The latter is an idea that even the administration has proposed including in their version of a tax expenditure cap because they know it has the potential to raise significant revenue from “the rich”. Don Marron, in response to a commenter at the Tax Vox with respect to his last post indicated putting a 28 percent cap on health insurance exclusions *only the “rich” raised the Treasury estimate by $200 billion. Imagine how much revenue could be raised if those health benefits were added to itemized deductions! Much, much more than $200 billion. As noted, the income distribution analysis is built already into those Treasury numbers. I think that alone deals with any struggles you may have on the distribution issue. (In this respect, see also AMT’s comment #53). That’s serious math, and not at all unfeasible, particularly since it has D support.

You may wish to factor these in before you come to a conclusion that it is “mathematically impossible” to eliminate or even reduce tax expenditures on the “rich” by at least $96.8 billion per year. Please note in the latter regard that I’m being extremely generous because the estate tax has never been lumped into that discussion about increasing tax rates on the “rich”, but I’ve agreed to include the estate tax in the mix even though, by the TPC’s own distribution tables, only 47.8 percent of the estate tax revenue would be borne by “the rich”.

As you know, I’m not fond of the “simple math” game because I don’t believe this is simple math. I ‘ve repeatedly stated that here, for reasons that I’ve outlined (again) in the prior comment. But, you set the rules and the tone and I went along for the ride.

As to the issue of policy or feasibility, or whatever, that has never been part of your argument. You set the precedent here by insisting that we take the math only and the math only. As you said, if you wish to address the policy issues, that would be another discussion. I sense you’ve now come to the realization that it is mathematically possible and are retreating to the position that,, well, even if it is, it is not politically feasible. Perhaps you’ve realized that your “point” after all this is that the WSJ did not select the right TPC table as their illustrative example to satisfy your demand for mathematical proof?

For what it’s worth, my preference would be to eliminate them all—for everyone—and lower tax rates to retain the same general progressivity in the code. I’d also retain the estate and gift tax at a much lower rate and eliminate the exclusions for gifts or bequests to charities. Although this preference is based on both policy and equity, that idea would sock it to the rich big time and I would call that “the Buffett rule”. “Math” is not preventing that from happening, but *politics* are.

I’m not wasting further time explaining why your consistently nonsensical and/or irrelevant points are so. I started to read your comment, but having seen it start out as more of the same, I’ll pass on the rest.

You really should learn to pay attention, to make at least fairly simple distinctions among arguments and questions (particularly after someone has explained your confusion/ invalid conflations/etc. and laid out what should clear up your confusion), to respond in good faith to questions you are asked (rather than responding with non sequiturs, straw men, irrelevancies, and various other evasions/diversions), and to reasonably readily admit when (even) you come to realize that you were wrong. I’m probably leaving out some stuff that was absurd and worse from you in this exchange that you really should try to avoid/reduce, but that’s enough for you to work on if, by chance, you value the goal of good-faith, logical, sensible, mutually responsive, productive, efficient discussion/debate anywhere near as much as you do spouting your views and defensively engaging in whatever tactic you find necessary to maintain the pretense that what you’ve been claiming is valid (presumably driven by insecurity and the desire to avoid the embarrassment that you associate with just admitting that you can’t back up your claim with a valid supporting argument).

I did scan some of the rest of your comment just now, and, as I expected, you are still a mass of oblivious confusion.

You write:As to the issue of policy or feasibility, or whatever, that has never been part of your argument. You set the precedent here by insisting that we take the math only and the math only. As you said, if you wish to address the policy issues, that would be another discussion. I sense you’ve now come to the realization that it is mathematically possible and are retreating to the position that,, well, even if it is, it is not politically feasible. Perhaps you’ve realized that your “point” after all this is that the WSJ did not select the right TPC table as their illustrative example to satisfy your demand for mathematical proof?

Apparently, even after all my repeated, clear statements distinguishing what my point and question were from what you were confusing them with, you still don’t get that simple distinction (or you’re pretending not to get it – take your pick, thick or insincere). I never said Obama’s claim was valid. I never said the editorial’s claim was invalid. I said from the start and throughout our exchange that my point was that I didn’t see a supporting argument in the editorial for their claim, despite figures they offered create that impression, nor did I see anything in the editorial from which a reader should be able to make a clear inference to that effect. You disputed my view of the editorial, so I asked you what they say in the editorial that constitutes such an argument or even a basis for such a clear inference. I asked you over and over and over again, and all you responded with was an abundance of nonsense, irrelevances, mischaracterized figures, and a supposedly decisive figure (that 98% that you asked me to “get real” and accept) that you eventually admitted was simply utter baloney that you apparently just fabricated, among other forms of crap.

Perhaps someday you will learn to understand what one’s point and one’s question are, and what they aren’t (at least when it’s quite simple and clear, when one has stated them repeatedly, and when one has even pointed out your confusion and explicitly made the distinction for you), and learn to respond in a way that makes some sense rather than this amazing, seemingly reflexive habit of responding to having errors pointed out to you with nothing but a new set of errors, and in some cases later recycling previous errors.

I think it would have been abundantly clear to the average WSJ reader, having given the example that a cap on itemized deductions of $50,000 would raise $749 billion per year largely imposed on the *top 1 percent* (to wit 79.9 percent), that this would be sufficient evidence (for that average reader) to extrapolate from that simple example and to (correctly) draw the simple inference that eliminating *all* the tax expenditures *for a much larger group of the “rich”* (comprising not only the top 1 percent but the top 2-3 percent ) would be sufficient to raise revenue of far more than $82 billion (or even $100 billion) per year. And, our subsequent exchanges have proved that that reasonable inference would have been absolutely correct.

I suppose the WSJ could have gone out and created their own study, or perhaps dug further into the TPC, Treasury or other archives to create a different or composite example to satisfy the non-average reader, but I suspect that they were assuming that the vast majority of readers could have made that reasonable inference all on their own.

I also suppose that if one wanted to prove that there are at least 823 billion or even a trillion gallons of water in Lake Erie, one could drain the entire lake to prove it. Another way to do it would be to drain a part of the lake and draw reasonable inferences from that. (in fact, by means of this simple method of extrapolation there are estimated to be 127,729 billion gallons in Lake Erie), but you are free not to believe that, if you wish.

Likewise, I’m reminded that in elections most news outlets call the election before all the votes are counted. If a candidate is receiving 70 percent of the votes when only half are counted, the average person would have no trouble extrapolating that to call the election for the candidate that is in the lead. Others might say that this is not a valid inference, but they would be not only in the small majority; they would also almost certainly be wrong. An even smaller subset of that latter category might even call for a recount. I suspect a majority of those in that latter subset would be from Missouri. Fortunately, for obvious practical and sensible reasons, the laws in most states don’t allow for that. As in that election example, this is not even a close call.

If you want to continue to maintain that the inference intended by that WSJ example was unreasonable or incorrect, that’s your prerogative, I guess.

You still seem to be overlooking some things that I pointed out, but I’m not interested in continuing to explain this stuff to you.

I’m glad at least you finally addressed my question without resorting to fundamentally mischaracterizing figures or fabricating your own. Again, you still seem to be conveniently overlooking some important points (and I disagree with your bottom line view), but at least you’re not making an argument that is obviously bogus this time, and that would have been a better type of response from you from the start instead of all the nonsense and irrelevancies, etc., that you generated.

What that NYT article speaks to is a point Vivian always misses, and which I’ve pointed out repeatedly in this thread: that eliminating all tax expenditures completely for that $250k+ segment is apparently not politically realistic (and would have to be phased in), and that everyone not applying Vivian’s oddly hyper-literal approach to a phrase such as Obama’s “the math tends not to work” usually means the “math” subject to the constraint of what is at least somewhat politically plausible (not unrealistic).

Which means the roughly $2 trillion is inapplicable for this purpose, even after adjusting to $1.7 trillion by subtracting the lost revenue from phasing in the measure.

And it probably also means that TPC’s roughly $160 billion per year that took (at least some) unrealistic tax expenditure cuts off the table but completely eliminated the rest (rather than capping them or capping deductions as a whole), is probably also of questionable applicability. Also, phasing in this measure (which TPC explained that it did not do in its calculations) would reduce the revenue amount, although apparently it would still be greater than $1.3 trillion, so if it is/were politically feasible, that would substantially exceed the presideint’s $968 billion, but whether or not elimination all such tax breaks (rather than eliminating just some or reducing/capping some or the overall amount) would be politically realistic is, at best, unclear. Also, that TPC analysis was for households $200k+, whereas the segment Obama is referring to is, I think, $250k+ for families and $200k for individuals, and that could amount to a substantial difference in revenue (based in part by eyeballing that Figure 2), although I don’t know.

None of the above shows that Obama was right and the WSJ editorial was wrong to claim that Obama was wrong because his math was wrong. But again, I think the figures offered in the editorial did not provide readers a good reason to conclude that Obama must be wrong, under the reasonable assumption that there is a constraint on the “math” of what is politically plausible. All they offered were figures to perhaps give that impression, and they didn’t even draw that inference explicitly themselves (conspicuously), but rather pivoted to the conclusion that their figures indicate enough progressivity that Obama should accept them (or one of them, or something similar).

If the editorial wanted to make the point re: eliminating (rather than capping) “loopholes and deductions” for that segment, they could have cited the (very well-known) TPC report regarding Romney’s “plan” (the $160 billion per year), and for that matter even pointed out that that analysis even left out potential revenue from reductions in some tax expenditures that either Romney indicated would be unacceptable (and which presumably congressional Republicans would oppose) or that were otherwise considered politically very unrealistic. That they didn’t reference that report (the $160 billion), and that instead they put forth examples of caps, suggests the possibility that they did not think complete elimination of all “loopholes and deductions” – or even elimination of the subset of tax breaks per TPC’s analysis of the Romney “plan” — was politically realistic, (and perhaps also that they realized that there was a problem re: the need to phase in such elimination within that segment, thus reducing the revenue figure), and therefore didn’t think such figures really represent a sensible basis for refuting Obama’s assertion re: “the math”.

They do imply that they consider a $50k cap on that segment realistic, yet, as I’ve shown, that falls far short of Obama’s $968 figure. As I said, it seems more likely than not that they were staying away from elimination of all “loopholes and deductions” from that segment because they considered it unrealistic. So suppose they consider a $17k cap the limit on what is politically realistic. Well, if we go beyond what the editorial offers and check that TPC analysis of a $17k cap on that segment, even that apparently falls short, because it shows $968 billion from (apparently) a larger segment (going down a bit farther in the income scale, I think; they say top 5%, starting at tax units of $227,595), and without subtracting some amount for phasing in. Those two factors combined could (and I’d guess would) leave the amount short of even roughly $968 billion. So a cap of $17k on that segment (phased in, as it would have to be), supports, rather than refutes, Obama’s assertion about “the math”, if we sensibly view “the math” as within the constraint of what is politically plausible (not unrealistic).

All said and done, we still don’t know – even with our own research beyond what the editorial offered — if a cap (or other type of reduction of “loopholes and deductions”) on that segment that the editorial writer(s) would consider politically realistic would be expected generate (statically) $968 billion, or even the $823 billion they put forth as the standard to meet. Maybe there is such a point (a $10k cap?), maybe not. But I really don’t think the editorial gave readers a sound reason to draw that conclusion.

So (1) I do not think the editorial really supported their claim that Obama’s assertion was wrong because his math was wrong, and (2) it is unclear, even after doing research beyond the editorial, whether or not Obama’s math was wrong, assuming, as is reasonable, that when we speak of “the math tend[ing] not to work” refers to “the math” within the constraint of what is politically realistic. And by the way, “politically realistic” for this purpose probably doesn’t even mean what has a realistic chance of getting enacted, but rather what even one “side” might seek – in other words, what plan that side (the Republicans in this case) might put forth, which is a lower standard to meet than what has a realistic chance of getting enacted.

Good point (which indeed you did make earlier) that the $160 billion was (I think) under the tax rate cut scenario, and would be larger under current rates –but you seem to be forgetting/overlooking that the segment to which TPC refers (householdes $200k+) is larger than the one to which Obama refers.

As for the $2 trillion, it’s unclear whether or not that’s Marron’s estimate or from some other source. In any case, the $2 trillion seems to be referring to ALL “tax expenditures” (although that, too, is unclear) applicable to the segment Obama refers to, not just those tax expenditures that TPC analysis considered, because the article refers to “getting rid of nearly every loophole or break in the code for high-income families — not just itemized deductions, but also preferential rates on investment income and every tax credit the wealthy can currently claim”, whereas the TPC analysis excluded reductions in investment-related “tax expenditures”. And TPC’s $160 billion per year pertained to households $200k+, whereas Obama is speaking of a smaller segment that (I think) is $250k+ for families and $200k+ for individuals.

So the $2 trilliion and the $1.6 trillion ($160 billion per year) seem to be apples-to-oranges on two dimensions.

If we start from the $160 billion, we have an upward factor of current tax rates (vs. the lower rates assumed by TPC), the downward factor of phasing in, and the downward factor of changing from the $200k+ households segment to Obama’s smaller segment. I don’t know how that all nets out directionally vs. the starting point of $160 billion.

The $2 trillion ($1.7 after accounting for phasing in) appears to be for all tax expenditures, including some considered politically unrealistic (and excluded by TPC), but pertaining to Obama’s smaller $250k+ segment. Would that $1.7 trillion become less than Obama’s $968 billion if only politically realistic measures were considered? I don’t know — and again, even with all this extra research beyond that editorial, it’s still not clear, and I don’t think the editorial provided a reasonable basis for such a conclusion.

Apropos of my other comments, two additional tables* at that TPC link I provided, combined, show that:

$2.2 trillion could be generated by eliminating all itemized deductions on everyone (under current tax rates — “Current Policy”).

31.6% ($695.2 billion) of that $2.2 trillion would come from the top 1%

49.5% ($1.089 trillion) of that $2.2 trillion would come from the top 5% (which they say is $227,595k+).

I don’t know how much would have to be subtracted for phasing in such a measure. That NYT article Vivian linked to provides an estimate of $300 billion reduction for phasing in roughly $2 trillion from cutting tax expenditures entirely on Obama’s $250k+ segment, but that $2 trillion apparently includes “not just itemized deductions, but also preferential rates on investment income and every tax credit the wealthy can currently claim”, so I don’t know if I can just subtract roughly half of that $300 billiion — i.e., roughly $150 billion — from that $1.089 trillion, but if we do, we get roughly equal to the president’s $968 billion. But again, that’s apparently for a larger segment than the president is speaking of (TPC’s top 5% of tax units starting at $227,595 vs. the president starting, I think, at $250k+ for families and $200k+ for individuals, which Vivian says [and seems about right to me] is somewhere between the top 2 - 3%. I’m assuming apples to apples between the two bases for percentiles, meaning that Obama is indeed speaking of a smaller segment, which seems to indicate that the revenue from totally eliminating itemized deductions for Obama’s 250k+ segment would still fall short of his $968 billion.

Would additionally cutting other “tax expenditures” other than itemized deductions as well as totally eliminating all itemized deductions for that segment then generate as much (or more) than that $968 billion? Apparently it would. But would the Republicans propose that — i.e., is it politically realistic in even that sense? I think it is not. meaning the math doesn’t work within the constraint of what is realistic. And I think the WSJ editorial writer(s) also thought it is not realistic, which I’m guessing is why they didn’t go with that scenario, but instead just went with a cap scenario, and even then, didn’t make an argument that “the math would work”, but rather just made the argument that it would be progressive enough that Obama should accept it if he is to be reasonable in their view.

My earlier reference with respect to the $2 trillion potential for eliminating tax expenditures for “the rich” ($200/250K) was to Figure 2 in the TPC document referenced below produced in response to the “Romney Plan” The narrative explanation preceding that Figure indicates that the estimate was based on 1) across-the-board tax rate reductions of 20 percent; and 2) first excluding all tax preferences related to “savings and investment” (as rather broadly defined by the TPC). Due to the latter exclusion, the estimate is likely an understatement for the category of “the rich” if such estimate would pertain to all tax expenditures. In addition to the narrative accompanying that figure, the note to the Figures states:

“The red bars correspond to the revenue available from eliminating available *non-savings-related tax preferences* by income group” (my emphasis).

I arrived at the $200 billion per year figure by adding up the red bars ($160 billion) for those earning $200K to $500K and reverse tax-effecting that upwards by 20 percent. Of course, I explained all that in my earlier comment #71.

Furthermore, the Marron estimate with respect to the potential savings was in response to a question from the NYT reporter regarding how much revenue could be raised from “the rich” by eliminating tax expenditures. In this context, his response should clearly not be read to have been intended to apply to all taxpayers. Rather, it seems to be pretty much consistent with my back-of-the-envelope “simple math” calculation as described above.

Yeah, I know that’s how you got your $2 trillion figure, but you are apparently totally missing (or pretending to miss) my point.

First, I didn’t say (as you imply I did) that the $2 trillion estimate in the article (whether it’s Marron’s or not is unclear) applied to all taxpayers; to the contrary, I clearly stated that it applied to the relevant segment (what I’m calling in shorthand “Obama’s $250k+”, which, as I’ve said I think is the case, $200k+ individuals and $250k+ families). But again, (1) the $2 trillion estimate in the article is apparently for eliminating ALL tax expenditures, including some not included in that TPC analysis from which you derived your $2 trillion, and (2) the article’s $2 trillion estimate refers to that $200/250k+ segment (”Obama’s $250k+”), whereas the TPC analysis from which you derived your $2 trillion is based on the apparently larger segment of households $200k+. Those are the reasons I said your $2 trillion (the $1.6 trillion from TPC, with your adjustment) and the article’s $2 trillion are apples to oranges.

And I added that the article’s $2 trillion is then adjusted down to $1.7 trillion to account for phasing in the measure, as your $1.6 trillion would need to be, along with adjusting upward for for current tax rates and adjusting downward for the smaller segment ($200/250k+ rather than the larger segment of $200k+ households used by TPC).

Get it? If you still don’t, I may not bother to explain the same thing a third time. Please pay attention and think before responding.

…To be more precise, the article’s $2 trillion may not include ALL “tax expenditures” (it may not include, for example, lower tax rates for cap gains), but it does seem to include a broader set of tax expenditures than were included by TPC, which is one of my two points re: the apples to oranges. As I said in comment #106, the article refers to “getting rid of nearly every loophole or break in the code for high-income families — not just itemized deductions, but also preferential rates on investment income and every tax credit the wealthy can currently claim”, whereas the TPC analysis excluded reductions in investment-related “tax expenditures”. (The TPC analysis apparently also excluded some other tax expenditures they considered unrealistic targets for cutting.)